Money Laundering Rife On Unregulated Exchanges

Money Laundering Rife On Unregulated Exchanges

Up until today, most governments are unsure about how to deal with cryptocurrency. For that reason, numerous unregulated cryptocurrency exchanges operate in that regulatory grey area. As a result, the exchanges are enabling transfer of criminal or dirty Bitcoin (BTC), also known as money laundering.

Interestingly, one of the main reasons for the lack of regulatory clarity in the cryptocurrency sector is suspicion of money laundering. Regulators insist that criminals use Bitcoin and other cryptocoins to transfer ill-gotten wealth. Now, a news release cites a research which concludes that 97% of the laundered money in Bitcoin passes through unregulated cryptocurrency exchanges.

Efforts at AML Reducing Money Laundering

Dubbed Cryptocurrency Anti-Money Laundering Report, the research acknowledges that current efforts against money laundering are bearing fruitful. However, countries with the weakest anti-money laundering laws are the biggest loophole for the criminals.

Speaking during the launch of the report, Dave Jevans, CEO of CipherTrace, says the presence of AML regulations is positive. CipherTrace is the organization behind the latest report. The company’s CEO is also a Co-Chair of the Cryptocurrency Working Group at the APWG.org. Particularly, Jevans notes that there is a direct correlation between the presence of AML regulation and reduced criminal activity.

Further, he says that Anti-Money Laundering Laws (AML) instill trust in the crypto-sphere. Therefore, continued effort to install more checks will see the instances substantially reduced.

We will see the opportunities to launder cryptocurrencies greatly lessen in the coming 18 months as cryptocurrency AML regulations [appear] globally,” says Jevans.

Unregulated Cryptocurrency Exchanges Facilitating Theft

On the other hand, alongside money laundering, the report establishes that the amount of money taken by hackers from cryptocurrency exchanges is quite high. As per the report, the stolen money in cryptocurrency is almost clocking $1B USD. In part, the report reads,

During the first three quarters of this year, the report shows $927 million of cryptocurrency reported as stolen from exchanges. The $166 million in reported thefts since the second quarter report result from an emerging trend toward more frequent and smaller cyber attacks by hackers.

Clearly, cryptocurrency exchanges still have the mammoth task of ensuring the safety of their cryptocurrency. Interestingly, all of this stolen money in cryptocurrency needs a conduit to reach a mainstream financial system. As a result, the criminals will still go back to the unregulated cryptocurrency exchanges to launder the money.

As per the report, countries have weak money laundering regulations if they fail to regulate illegal drug dealing. Secondly, countries that fail to enforce know-your-customer (KYC) regulations also have weak AML. These and other reasons expose the countries to criminal activities.

RISK DISCLOSURE

This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on them. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in any cryptocurrency and read our full disclaimer.

 

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Author: Ruchi Gupta

Ruchi Gupta works as a freelancer covering various beats from finance to technology and from lifestyle to hobbies. She has an MBA in Finance. Ruchi enjoys writing on celebrities and political news. She likes traveling and exploring places.

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