FINMA Warns of Rising Crypto Money Laundering Risks

Switzerland’s Financial Market Supervisory Authority (FINMA), addresses the urgency of regulatory measures against rising crypto money laundering risks in its annual “2024 risk monitor report”.

Swiss financial watchdog has issued warnings in the report amid rising misuse of digital assets – specifically cryptocurrency and stablecoins.

This rising trend of money laundering complicates law enforcement efforts to investigate & track money launderers. Thus, financial institutes are more vulnerable to reputational & legal damage without having any risk management strategy.

The FINMA Risk Monitor 2024  report highlights that cryptocurrency & stablecoins are becoming a target of money laundering & other illegal activities. Not only this but their use in transactions & sanctions evasion on the dark web sparks the concern of financial regulators.

“The Swiss financial sector remains a regular target for cyberattacks. Weaknesses in IT infrastructure, inadequate security measures, and lack of awareness increase financial institutions’ vulnerability.”

FINMA

Rastra Bank Warns Nepalese Residents Amid Rising Crypto Scams

In September 2021, Nepal banned digital asset trading. Despite this ban, Nepal’s Financial Intelligence Unit (FIU) highlighted the rising trend of misusing digital assets for money laundering.

Nepal Rastra Bank also published the “Strategic Analysis Report,” which depicts the complete procedure of how criminals convert, layer, and integrate cryptocurrency into the economy.

This report also highlights how fake crypto investment schemes trap Nepalese residents and the role of social media in this scheme.

Read Also

• EU Parliament Revises Policy On Sanctions that Include Digital Assets Controls
• Brazil Stops a $9.7 Billion Crypto Money Laundering Operation
• Dublin Man Arrested Over €6.5 Million Cryptocurrency Seizure

How Do Digital Assets Facilitate Money Laundering?

On October 16, 2023, Stablecoin firm “Tether – the largest firm in the digital asset industry” captured $873,118 in digital assets from 32 addresses in Israel & Ukraine.

Key factors driving money laundering in stablecoins & cryptocurrency are:

• Monero and Zcash, popular privacy coins, obscure the identity of transacting parties due to their privacy features.
• Law enforcement agencies and FIUs can’t track cross-border transactions of digital assets.
• The origin and destination of digital assets can’t be traced due to their pseudonyms nature.

On April 23, 2024, the spokesperson of Tether addressed:

Strategies Implemented by FINMA to Mitigate Risk

As a result, FINMA has mandated the implementation of institution-specific measures against these risks, such as additional risk management regulations and focused oversight.

Broader initiatives including changes to audit programs and on-site inspections to improve money laundering defenses.

The regulator has also demanded precise definitions of risk tolerance and efficient risk management procedures, especially for organizations that work with clients in high-risk industries or politically exposed persons.

The report shared that, these programs are intended to reduce vulnerabilities and guarantee adherence to anti-money laundering laws.

“In relation to digital assets, FINMA takes institution-specific measures to mitigate the money laundering risk.”

FINMA

Secure your financial institution from the rising threat of crypto-related money laundering activities.