Nov 8, 2021
Reality strikes back to the crypto world?!
As a professional working in the crypto world, I have found that it is well known that the crypto enthusiast community looks at the Anti-money laundering policies or the KYC process as a real struggle when trying to participate in the crypto sphere.
However, in the eyes of the regulators, national and macro-national, cryptocurrencies generate a high risk of money laundering, facilitating the integration of illicit money into an alternative financial system, which makes its identification, regulation, and control much more difficult. These types of currencies generate an impact not only for the economy but also for the achievement of different crimes such as the purchase of weapons, financing of terrorism, proliferation, inflation, among others.
But many remain skeptical regarding regulators’ concerns about cryptocurrencies and here is where I wonder why. A simple explanation could start by saying that the traditional system is just in a position where it can be challenged and the decentralization of finance scares the baby boomers. But in reality, as an AML officer in the crypto sphere, I believe that is mainly because we normally don’t read or listen to any case of financial crime that has happened due to crypto, which is not related to a scam.
So, nothing is real until we see it right?
Well then, here is reality talking to our faces that AML is actually important in Crypto and why policies, regulations, and compliance are not villains in our business that are just good to stop the growth and cut profits.
Crypto-Laundering
The Federal Oral Court of Bahía Blanca in Argentina convicted 7 defendants in the case “Bobinas Blancas”, in which six of the accused were convicted of illegal storage of narcotics. As part of this case, the largest cocaine shipment in the history of the country was seized; However, the news for all is that a crypto active operator was convicted of laundering the money of the criminal organization.
The operator offered bitcoin trading services outside the exchange platforms. That is, he received cryptocurrencies to an account abroad and delivered the equivalent in cash in the country, or he received the money in the country and transferred the bitcoins to a beneficiary abroad.
In this context, the authorities considered that the operator could not ignore the illicit origin of the money, therefore, they understood that the provision of this service, contributed to the laundering of funds from drug trafficking.
The operator was sentenced to 5 years in prison, a fine of USD 3,747,200, and the confiscation of the assets related to the crime.
The precedent highlights the importance of the duty of diligence and knowledge of the client (KYC) and AML, even in the context of unregulated or poorly regulated activities.
In other words, compliance (known also as AML)policies are very important and all steps and guidelines made are there for a reason and it is to keep bad elements out of our business.
