In a report released Wednesday, the Council of Europe’s Moneyval committee urged European countries to crack down on cryptocurrency-enabled money laundering.
Moneyval, which checks compliance with dirty-money regulations in smaller European countries, has warned of the dangers posed by decentralized finance, privacy coins, and what it claims is market manipulation of big cryptocurrencies. In a preface to the report, Moneyval Chair Elzbieta Frankow-Jaskiewicz stated that the research extends beyond drug trafficking to topics such as fraud, corruption, and tax evasion. She further added,
“It is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago. Methods are becoming ever more sophisticated, and larger in scale.”
The advisory group joined standard-setters such as the Financial Action Task Force (FATF) in advocating for a more stringent approach to cryptocurrency. Some in the sector have cautioned that controversial FATF requirements to recognize cryptocurrency users and allow funds to be tracked, which are now being implemented in jurisdictions like the EU, could threaten privacy and innovation.
The rapid evolution of technology, which frequently stretches across numerous jurisdictions, presents a challenge to regulators, according to the research, which calls for increased regulation and supervision as well as improved coordination across national agencies. It added that a study anticipated later this year will look into bitcoin laundering tendencies.
Moneyval is in charge of overseeing the mainly smaller European jurisdictions that are not supervised by the FATF in Paris, such as fintech hotspots Malta, Gibraltar, and Estonia.
Could EU cryptocurrency laundering plans overwhelm authorities?
New European Union proposals to monitor crypto transactions using unhosted wallets could violate international money laundering authorities’ risk-based approach, according to an official from the bloc’s own banking body. The European Commission’s policymakers also cautioned that any decision to eliminate the 1,000-euro limit for detecting cryptocurrency payers must be supported by evidence.
The debate rages on, with industry data claiming that only 0.15 percent of cryptocurrency transactions contain illegitimate addresses, according to Chainalysis. Some lawmakers, on the other hand, argue that it’s far too easy to split up a large digital payment into several smaller portions in order to get around any regulatory restrictions.