Tanya Abrosimova
Independent Analyst
- Bitcoin cross-border transactions may be involved in money-laundering.
- Weak KYC proscedures put large financial institutionsl at risk.
Bitcoins were moved across the borders in 74% of all transactions in 2019, which heightens risks of money laundering, the experts of the cryptocurrency research company CipherTrace found out. They also added that insufficient KYC/AML measures may pose risks for bands and other regulated financial institutions.
They have analyzed how the implementation of the Financial Action Task Force (FATF) recommendations for the cryptographic industry will affect banks that are increasingly involved in servicing industry participants.
FATF published new rules for virtual asset service providers (VASPs) in June 2019 and gave organization twelve months to implement them.
CipherTrace analyzed KYC procedures of 500 leading VASPs and came to the conclusion that 57% of them had weak or insufficient KYC/AML measures. While the figure is lower than a year ago (67%), it is still alarmingly high.
The experts pointed out that criminals are constantly looking for new loopholes and quickly use them to launder money and hide their traces. It means that the cryptocurrency exchanges need to strengthen their KYC/AML measures to reduce the risks for both buyers and sellers of the cryptocurrency, especially, if the transaction involves fiat currency.
CipherTrace estimates that a typical large U.S. bank handles over $2 billion in crypto-related payments per year without identifying them as such. The company's specialists believe that the banks cannot cope with this problem on their one. The cryptocurrency industry has to strengthen its approach to KYC/AML.
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