Ladies and gentlemen, today we are going to discuss money laundering through cryptocurrencies, paying more attention to risks posed by cryptocurrencies. Little information is available on this topic especially on the use of cryptocurrencies in aiding money laundering. Let us define some terms that are of key importance in this discussion.
- Digital currencies. This is just a general term used to refer to all electronic money, including cryptocurrencies and virtual money.
- Cryptocurrencies. This is a type of a digital currency based on cryptography.
- Money laundering. This the process where criminals disguises the origin of criminal proceeds to be from a legitimate source through various schemes.
The presence of digital currencies eliminates the need for financial institutions or government agents to facilitate transactions. This aspect alone creates some risks in transactions. We also understand that these intermediaries play a key role in monitoring criminal activities in the financial system. Financial Action Task Force (FATF) provides some specific recommendations on how to monitor transactions and how to respond to such instances when there is suspected criminal activity. Another aspect of cryptocurrency is the issue of anonymity. Money laundering thrives in places where there is total anonymity and lack of paper trail. The question we should be asking ourselves, does cryptocurrency aid money laundering ? This study will provide this answer and also attempt to come up with practical measures on how to address risks posed by cryptocurrencies.
Digital currencies have been into existence ever since 2008, during the introduction of bitcoins, and it has hit airwaves in a number of controversial ways. Notably, bitcoins was often preferred in making ransomware. This is due to the fact that it was very hard to owner of the bitcoin since and individual deals with a digital wallet. Cryptocurrencies also grew drastically all over the world. However, the awareness, application and regulations remain a challenge to various governments. This study weighs in to provide some answers to some tough questions relating to risks posed by cryptocurrencies in aiding money laundering.
Crypto Wealth Formula. 2022. Bitcoin Earn Free Website.
In this research study, I designed two research questions that will enable me explore the topic. Answering them will make it possible for the author to attain the objectives of this project. It is quite clear that cryptocurrencies pose a great risk in money laundering. This project will look at the opportunities to extend anti money laundering regulations to cryptocurrencies. Can the same regulations be used in cryptocurrencies? Different countries have armed themselves in addressing the risks posed by cryptocurrencies, of key interest to this study is the USA. The study will strive to study the approaches in the US in addressing the money laundering challenges posed by cryptocurrencies.
Significance of the study
This study is meant to critique the approaches used by the USA to address the aspect of money laundering activities and the risks posed by digital currencies. Due to limited awareness of cryptocurrencies and their role in facilitating money laundering, I developed an interest in diving into this area, intending to find a solution for the current challenges. In the future, I intend to be at the forefront of fighting financial crimes, and this project will provide a practical experience. This project is aimed at mitigating or alleviating some of these challenges (Choudhri 2).
Carrying out this study has many benefits to the student, the government and future researchers. The study creates a professional conversation around money laundering and how cryptocurrencies pose a major risk. It is from this conversations where regulations are created to address some of the challenges that have not been dealt with before. The students will benefit from this project since it provides them with the opportunity to interact with the professionals and government agencies in their search of knowledge. The government will also benefit from the study through recommendations made in this paper. The study will also provide a good basis for the future researchers in this domain, going deeper to issues and having a wider coverage.
Generally, this project is aimed at curbing money laundering activities and enhancing risk assessment across countries. Therefore, at the completion of this project, I expect banks to have comprehensive continuous customer screening exercises for assessing risks and increased detection of money laundering activities. The best way to reduce money laundering activities is to increase the perception of detection in financial institutions through continuous risk assessment.
Ladies and gentlemen, the study will use journal articles and commentaries as secondary legal sources of information. The commentaries will provide some clarifications required from the commenters and the interpretation of the law while highlighting issues of concern (Benson 110). Using both primary and secondary sources of information will provide a descriptive analysis of the law. This study will use secondary sources, as these sources are seen as not limiting the description of the law but criticizing the effectiveness of the law (Association of Certified Fraud Examiners). In addition, secondary sources will not be limited to legal journal articles only but also non-legal sources.
The data for this study will always be qualitative, as the research questions for this study center around the status and treatment of digital currencies, which is hardly found in quantitative data. If permitted, in some instances, the study will incorporate statistical data, but this will be applied to limited situations only. Both qualitative and quantitative approaches are necessary in order to consider the existing link between money laundering and cryptocurrencies. It might not be easy to prove the existence of the link between money laundering and cryptocurrency.
Association of Certified Fraud Examiners. Fraud Examiners Manual. ACFE, 2021.
Benson, Katie. “Money Laundering, Anti Money Laundering and the Legal Profession.” The Palgrave Handbook of Criminal and Terrorism Financing Law, 2018, pp. 109-133. Web.
Choudhri, Yousef. “Report: Money Laundering via Cryptocurrencies up 30% in 2021”. 2022.