EU: Virtual Currencies Difficult to Use for Criminals
A new report by the European Commission explains that criminal organizations would like to use cryptocurrencies but, they don’t because they don’t have the necessary technical knowledge to do so.
Criminals and Virtual Currencies
On July 4th, the European Commission published a report that describes in detail the potential use of virtual currencies for illegal activities. The report indicates that criminal and terrorist organizations could use virtual currencies to finance their activities and launder their revenue.
While there have been few investigations into the matter, those that have been conducted have concluded that while criminal organizations are very interested in using such virtual currencies, the technical acumen needed is hindering their ability to do so.
The report further explains:
LEAs have gathered some information according to which terrorist groups may use virtual currencies to finance terrorist activities. However, the use of virtual currencies requires technical expertise which makes it less attractive.
Virtual currencies can also be a tool for criminal organizations to anonymously transfer money without raising suspicion from authorities.
The report suggests:
The assessment of the ML threat related to virtual currencies shows that organised crime organisations may use virtual currencies to have access to “clean cash” (both cash in/out). When used, virtual currencies allow organised crime groups to access cash anonymously and hide the transaction trail.
Money laundering through cryptocurrencies is also a big concern for the European Commission.
What is the Solution?
According to officials, a potential solution for this problem is the creation and deployment of a European legal framework that properly monitors and records transactions of virtual currencies.
Most exchanges in Europe are not forced to implement AML/CFT requirements for their service.
The report suggests that this may be a problem for authorities since this hinders them from correctly identifying specific virtual currencies that are associated with criminal activities:
In the current situation, VCs providers cannot be monitored and supervised. There are no common rules in the EU to ensure that VCs providers apply AML/CFT requirements.
The legal framework will mainly focus on implementing proper AML/CFT requirements for cryptocurrency exchanges, in order to properly track individuals or organizations that launder, fund or support criminal/terrorism related activities.
What are your thoughts on this report? Do you think that a European legal framework is necessary for proper cryptocurrency regulation? Let us know in the comments below!
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