Global Regulatory Firm To Tighten Rules On Cryptocurrency

The Financial Action Task Force (FATF), a global regulatory firm based in Paris and comprised of countries ranging from China to the U.S., said it was going to increase scrutiny over digital currencies to make sure they weren’t being used to launder money, according to a report by Reuters.

The firm plans to draft rules and oversight for cryptocurrency firms to prevent abuse. The initiative highlights concern from authorities around the world that cryptocurrency is being used to hide money gained from criminal activity.

The FATF said that crypto firms and exchanges will have to be registered and supervised, and that suspicious transactions will have to be reported. The firm said that checks on customers will have to be done as well.

Simon Riondet, the head of financial intelligence at Europol, said that using crypto to launder money was becoming more and more common. Europol recently discovered and stopped a Spanish cartel from laundering drug money using cryptocurrency ATMs.

Crypto is increasingly being used to move money across borders and break down large amounts of illicit money into smaller chunks to avoid detection, Riondet said.

“We also have some investigation on the dark web in which the payments are made in cryptocurrencies, sometimes in bitcoin, and they are switching it to more anonymized cryptocurrencies,” he said.

One particular cryptocurrency, Monero, is so secretive that it allows customers to hide almost all the details of a transaction. Cryptocurrency is seen by some as a way to use money with less government control, but the banking sector views it as a threat to the traditional banking systems in place.

Facebook’s foray into the crypto world has brought increased attention and scrutiny to the sector, too, and many countries are planning oversight of the new currency to make sure it won’t disrupt the entire industry or be used criminally.

Digital currency does not offer full anonymity because actions can be tracked by the blockchain tech that helps them exist and move. However, there are many ways to remain fairly anonymous. Also, many crypto exchanges are viewed as not having enough oversight or checks on who’s doing what, which allows for some questionable activity.