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Anti-Money Laundering

United States Army Intensifying Battle Against Illegal Crypto Transactions Using Cloud-based Solution

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The U.S. Army Criminal Investigation Command (USACIDC) is looking to step up its efforts to effectively track illegal crypto transactions by using a cloud-based solution. The solution involves a Software-as-as-Service web application that has the capability to detect illicit crypto trades in order to combat money laundering and fraud. According to a recently published statement of work both the Major Cyber Crime Unit and the FBI have also expressed their intention to use the app to curb illegal crypto transactions.

Furthermore, the organization has announced that it is actively taking bids for any tested and already developed app. The application must be ready to be used in the battle against fraud and money laundering. All bids are to be submitted before the deadline set for July 20. 

USACIDC sets conditions for the web application

The USACIDC, an arm of army that is sorely responsible for investigating any criminal involvement in the world, has set the conditions that the app must meet to allow it to track illegal trade effectively. The app must also be capable of analyzing all major cryptocurrencies such as Bitcoin in real-time; allowing users to investigate the origin of crypto trades.

Plus, the app should be quick to detect any suspicious activity involving illegal crypto transactions while tracking cryptocurrency connections.

The app should also feature capabilities such as pattern analysis and involvement with other entities. In addition, it should provide a link analysis tool that will prove handy in the data analysis process.

Stepping up the efforts to combat illegal crypto transactions

Earlier last year, the United States Army Contracting Command of New Jersey published a notice calling for an app that would help security agencies identify people engaged in illegal crypto trading. Development of a web-based military application; alongside other relevant government agencies, will massively boost their efforts to combat illegal crypto transactions in the sector.

A New Legislation to Regulate Digital Currency Payment Suggested by G20

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A new digital currency payment bill proposed by the G20 is set to propel the adoption of cryptocurrencies to levels never seen before. The G20 countries announced on 11 July that they might introduce a regulatory framework to payment of digital currencies and allow “digital currency” instead of just cash payment methods.

The Group of Twenty or G20  is an international forum for governments and central bank governors from 19 countries and the European Union. Members of the G20 are Argentina, Australia , Brazil , Canada, China , Germany, India , Indonesia, Italy , Japan, Mexico , Russia, Saudi Arabia, South Africa, Turkey, United Kingdom , United States of America and the European Union.

G20 ‘s attention to cryptocurrencies is a big deal for the entire industry. The successful approval of the proposed new bill is lucid: it will stimulate the mass adoption of digital currencies. This massive adoption is due to the fact that G20 nations account for 90 % of the world’s gross revenues.

In addition, more than 80% of all trade activities worldwide take place in these countries. And also the G20 countries account for more than 50% of the world’s total land area and two-thirds of the world’s total population.

G20 to enact FATF digital currency payments guidelines

The Financial Action Task Force ( FATF) is a body founded in 1989 to battle money laundering. The Authority held its annual Private Sector Consultative Forum in Austria this month, and digital currency payments were among the topics discussed.

The FATF reiterated that the guidelines and recommendations for implementing digital currency payments are still in place. Subsequently, the authority advanced to show its support for virtual assets, stating that crypto assets could have a significant impact on the world economy.

The G20 nations have also accepted  to support the guidelines recommended by the FATF by enforcing them. In particular, Russia, one of the G20 nations, has agreed to establish a regulatory structure for crypto assets in the country. The enactment of a clear structure in line with the FATF Directives was planned for July last year, but Russia is set to implement it this month.

Bottom line

In addition, another G20 member in Japan is actively working to establish a policing guideline for crypto assets in the country. South Korea is also reportedly prioritizing a clear regulatory structure and is working towards the realization of a consistent structure. On the other hand, South Africa and China could potentially see a change in cryptocurrency policing in their respective countries this year.

European Union’s Latest AML Directives Means Banks Can No Longer Shut Down Crypto

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The crypto company is faced with a lot of obstacles in the way forward. Anyone interested in the cryptocurrency sector is aware that it is not only regulations that pose the greatest threat to the viability of the venture, but also lack of access to very basic financial requirements, such as a bank account. This is threatening to bring down the crypto business by shutting it out of the mainstream economy.

Such practices are referred to as de-risking. De-risking can be brought about by a number of factors such as prudential needs, profitability concerns, anxiety after the global financial crisis or even esteem concerns. Actually, the Financial Action Task Force (FATF) identifies de-risking as the event where financial institutions discontinue or limit their business relationship with some clients or a sector of clients.

Nevertheless, the FATF only allows financial institutions to put an end to business relationships on a case-by-case basis, not to cut off the entire business field. Nevertheless, this remains a major obstacle for the cryptocurrency industry. Nevertheless, this may soon change due to the much-awaited Fifth Anti-Money Laundering Directive of the European Union, also referred to as AMLD5

Cryptocurrency Business Falls Under the Same Designation as Banks

The Directive, which was introduced in July 2018, considers virtual assets and virtual asset service providers as ‘ ‘obliged entities.’ This means that cryptocurrency organizations, such as exchanges and wallet service providers, come under the same designation as banks, payment processors, gaming and gambling entities. Provided a cryptocurrency business is approved and compliant with the relevant authorities, it should be treated in the same manner as the above entities.

Going forward, in the light of AMLD5, financial institutions such as banks should handle AML risks individually or directly. They should not deny services to the entire sector but deal with such cases on an individual basis. A bank can not deny service solely because an entity belongs to the cryptocurrency sector.

Indeed, this presents both an opportunity and a challenge to the digital assets industry. To realize its true potential and even reshape the financial sector, crypto and blockchain technology should welcome criticism from regulators across the globe. These businesses should use the AMLD5 as a stepping stone, a drive to prove to the whole world the significance and commitment to providing real-life solutions and transparency. Those working on developing solutions using the blockchain technology should be open to working with the government, the regulators and even financial institutions to create a regulated, clear business framework that recognizes the fundamentals of the crypto world.

Furthermore, we can say the AMLD5 is a very positive development for the virtual assets space. It is of utmost importance now for the founders and developers to work with EU regulators and even others to build a working relationship that works for everybody. Although the AMLD5 has its own disadvantages, it is a start for the digital currency industry to put a foot inside the mainstream economy positively. This will enable the industry to expand, grow and even flourish. 

In Conclusion

It is my aspiration that AMLD5 should be a message to financial institutions that the virtual currency industry should be treated in the same way as all other business sectors. Cryptocurrency should be treated fairly, on a case-by-case basis, like all the others. It is time for all stakeholders to come together and use this technology to provide real-life solutions to the world.

 

Bad News for Bitcoin, DoJ Busts an Enormous Money Laundry Operation

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The growth and adoption of Bitcoin and other cryptocurrencies have long been subdued by the notion that they are tied to the dark web and the criminal world. This perception is basically because the crypto technology started as a payment method on darknet marketplaces.

Over the years, this narrative has been gradually disappearing. However, traces of it still exist among the state administration and retail investors. This has played a huge part in the technology’s slow adoption worldwide.

Well, this is symbolized by the United States’ latest 2021 fiscal budget proposal. Cryptocurrency crimes seem to be an area of concern. Trump’s latest budget proposal seeks to crack down digital currency-related crimes in the near future.

Moreover, the recent reports of a massive $300 million money laundry scheme further strengthen the tale. The plot which was just recently busted by the United States Department of Justice (DoJ) may be the poster child of the government’s strengthening account against Bitcoin.

DoJ  Indicts Ohio Man for Laundering $300M in Bitcoin on the Dark Web

The DoJ charged Larry Harmon earlier this week for allegedly conspiring to launder $300 million using Bitcoin. Harmon ran the Helix money laundry scheme which had advanced operations that helped clean money used for transactions. As per the DoJ, Helix laundered the money through a dark market place called AlphaBay.

“Helix functioned as a bitcoin ‘mixer’ or ‘tumbler,’ allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin.” 

In addition, Harmon lured users by acclaiming to conceal cash transfers from law enforcement. On top of Helix, Harmon also ran a Dark Web search tool dubbed Grams. The Assistant Attorney General of the Justice Department’s Criminal Division, Brian Benczkowski commented on the matter through the press release saying:

“Helix allegedly laundered hundreds of millions of dollars of illicit narcotics proceeds and other criminal profits for Darknet users around the globe…This indictment underscores that seeking to obscure virtual currency transactions in this way is a crime, and that the Department can and will ensure that such crime doesn’t pay.”

Furthermore, Harmon’s accusations include that Helix outfit transferred more than 350,000 Bitcoin; valued at over $300 million at the time.In addition, the illegal business also powered money laundry schemes of other users on AlphaBay. According to the DoJ, AlphaBay is a heavily trafficked Dark Web Vendor.

Government’s Case Against Crypto Strengthens

Moving forward, Donald Trump’s recently proposed budget mentions the term cryptocurrency twice. On both occasions, the term is directly associated to funding terrorism and other criminal activities.

The budget also highlights that the Secret Service to be returned back to their original duty in the Treasury. Initially, the Secret Service was formed to investigate financial crimes and protect presidents. This move is particularly to provide more oversight to the Bitcoin and cryptocurrency industry.

In conclusion, it is still not clear whether involving the Secret Service in the digital currency industry will reap more advantages or disadvantages. However, it is crystal clear that the recent Bitcoin money laundry indictment by the DoJ; will drive the government into increasing its involvement and oversight in the market.

 

FinCEN Warns Social Media Companies Eyeing on Cryptocurrency 

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  • FINCEN’s Jamal El-Hindi warns companies building cryptocurrencies about illegal transactions.
  • FinCEN will have a close look at all the illicit transactions happening across Social Media.
  • FinCEN sees Social Media, Messenger applications as the top infected platforms for money laundering and terrorist financing.

Speaking during the Anti-Money Laundering conference, the deputy director of the Financial Crime Enforcement Network (FinCEN), Jamal El-Hindi remarked that the Social media networks and messaging platform with crypto activities must look at the anti-money laundering acts. 

FinCEN appointed Jamal El-Hindi in May 2015 to oversee several tasks required to safeguard United States’ financial system from illicit transactions, money laundering activities and other transactions that are associated with criminal acts in a country. 

20th SIFMA Anti-Money Laundering and Financial Crimes Conference

Noticeably, the report comes in the wake of Jamal El-Hindi’s presence at the 20th conference of Securities Industry and Financial Market Association (SIFMA) which was held in New York on February 06, 2020. SIFMA is a non-profit trade association, representing financial firms of all sizes including investment brokerage firms, securities brokerage firms and other investment entities in the United States. 

While delivering the talk on the illicit transactions fostering the Money Laundering and Terrorist Financing, Jamal El-Hindi stated that the social media companies, especially those who are building cryptocurrencies must guard their system. He elaborates that these companies must be careful and vigilant about any illegal transactions. 

Undeniably, Facebook’s plan of launching Libra is under fire following continued regulatory push backs – however, reports also note that the prepared remark of Jamal El Hindi neither had any highlight about Facebook nor about Libra. 

Nonetheless, FinCEN will maintain a bird’s eye on every entity striving to enter the global financial system. Furthermore, they will review whether or not the companies entering the financial system with the approach of cryptocurrency adhere to laws set in place including – preparing a report on money laundering, terrorist financing, and other impermissible activities.

It was also reported that FinCEN is working closely with two the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to deal with the issues concerning digital assets. More so, FinCEN is reportedly focusing on the web and mobile application of social media platforms as they perceive these applications tend to attract money laundering and terrorist financing.