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Suspected money laundering with Bitcoin & Co.




Frankfurt The crypto hype of the past few years shows its downsides. As can be seen from a response from the federal government to a parliamentary question submitted to the Handelsblatt, the incidence of suspected crypto cases is increasing sharply at the Customs Money Laundering Unit (FIU).

While the number of suspected money laundering reports in connection with cryptocurrencies was around 570 in 2018, it rose to around 2050 by 2020. This corresponds to almost a quadrupling.

The number “showed an above-average increase compared to the total number of reports,” continues the responsible Federal Ministry of Finance. That means: Even compared to the overall increase in the number of messages, there was an above-average increase in crypto currencies.

FDP financial expert Frank Schäffler, who made the request, does not see it as a fundamentally bad signal. “The crypto market has grown overall. Established institutes are also increasingly getting involved ”- including the Stuttgart Stock Exchange with its crypto trading app Bison or Bitcoin financial institutions such as the Berlin neobank Nuri (formerly Bitwala).

“Established institutes report suspected cases more consistently, which explains part of the increase,” believes Schäffler. At the same time, he is convinced that the abysses of the crypto market are seen more clearly today than in the past. “Especially the increasing blackmail attempts in medium-sized businesses, in which hackers encrypt computers and only release them again for a ransom in the form of cryptocurrencies, have increased the sensitivity for the money laundering problem again.”

Lack of persecution pressure with Bitcoin & Co.

Schäffler’s conclusion: “The federal government must increase the pressure to persecute. Bitcoin is only pseudo-anonymous, law enforcement agencies have to try to track down dirty deals. For this, know-how urgently needs to be built up and invested. ”Money laundering with crypto currencies is“ not a marginal phenomenon ”, but is a massive burden on the German economy.

However, criminals who use cryptocurrencies to conduct their dark business have nothing to fear so far. “The FIU does not have reliable knowledge of the exact total amount of money laundering or terrorist financing committed using cryptocurrencies in Germany or the European Union,” clarified the Federal Ministry of Finance in its response to the inquiry.

Also on the question of how many Bitcoin and Co. were confiscated in connection with criminal transactions that have already been uncovered in Germany, “(…) no findings are available”. Some areas of the crypto market are even completely exempt from state regulation. “Mixer” portals, which are used to swap crypto values ​​for other crypto values ​​and are regularly used by criminals to disguise payment flows, are not covered by the current EU regulations.




Experts see this as a dangerous loophole in the law. “Since the fifth amendment to the EU’s anti-money laundering directive, stricter rules have also applied in Germany,” explains Volker Brühl, Managing Director of the Center for Financial Studies at Frankfurt’s Goethe University.

Since then, crypto platforms and other financial service providers who want to operate the crypto custody business in Germany have had to apply for a permit from the financial supervisory authority Bafin. In addition, they are subject to the requirements of the Money Laundering Act, so they have to verify their customers, among other things. Many providers of digital wallets and crypto exchanges have now introduced corresponding processes.

But: “That doesn’t mean that you can track down all criminal users with this new regulation. Because there are still opportunities to conduct crypto business anonymously, especially in the darknet, ”said Brühl. The result: “Bitcoin and Co. remain the preferred means for money laundering.” And even if the major central banks and supervisory authorities agreed on a joint approach, there would still be enough jurisdictions in which covert transactions with cryptocurrencies would still be possible .

Unprocessed suspicious transaction reports

The question that remains is what the FIU is doing with the many crypto reports. In the past, the special money laundering unit was repeatedly criticized for filing thousands of suspicious transaction reports with virtually no processing or simply forwarding them to the overwhelmed public prosecutor’s offices.

In response to a request from Handelsblatt, the FIU does not want to provide any information on the processing rate of the more than 2000 crypto suspicious transaction reports in 2020 and refers to the annual report, which only contains general quotas. “The FIU does not show separate sales quotas,” explains a spokeswoman.

Left-wing financial expert Fabio De Masi, who was one of the first observers to draw attention to the problems at the FIU in 2017, is skeptical that the increased number of reports will lead to increased pressure to prosecute: “The increased number of money laundering Reports of suspicion to the FIU were seen by some as evidence of successful German supervision. But where a lot is reported, more work has to be done. And that is exactly what is lacking. ”The number alone is therefore not a reliable indicator.

De Masi fears that the vast majority of suspicious transaction reports relating to crypto will remain unprocessed at the FIU. The financial expert calls for a fundamentally different view of the risks of the crypto market. “It is an open secret that there are many dubious market participants.

The industry often argues with anonymity and data protection. But I think anyone who wants to remain completely anonymous in their financial transactions should pay in cash. However, there must also be threshold values ​​for cash. ”When it comes to preventing money laundering, there should be no differences between different asset classes, says De Masi. “Cryptocurrencies are not a means of payment for everyday needs.”

More: Banks struggle with the new money laundering directive.


Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.
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