Cryptocurrencies were designed to operate on a decentralized market, offer greater anonymity to their users, and require minimal involvement from major organizations and regulators. As such, it was only a matter of time before they would be used for illegal purposes.
Sure, in 2024, we’re far from the era of the Silk Road, and cryptocurrencies are a mainstream trend in modern society; the problem is, however, that there’s still a lot of room for abuse.
This is why 2024 seems to be a massive year when it comes to anti-money laundering policies and measures.
With that in mind and without further ado, here’s a bit more you need to know about the new rules, changes to the old rules, as well as some of the challenges of anti-money laundering in 2024.
-
Destinations of funds leaving illicit wallets
Now, before we carry on, it’s important to stress out a few things. First, the majority of people are using crypto completely legitimately. Some people are just using this type of digital money because it’s quicker and has lower fees than fiat.
Others are investors who saw the rise of BTC from 2017 onward and decided that finding new cryptocurrency releases is worth their time. Then, there are just those who are trying to diversify their portfolio and find that this asset is exactly what they need.
Now, these people are not a concern to the regulators. As long as they pay their taxes on crypto gains (provided that this is regulated, as well), no one will ever bother them.
Instead, these regulatory bodies focus on destinations like ATMs, mining, gambling, and bridges from ransomware wallets. Again, the destination itself is not indicative of a problem. It’s just that – statistically speaking, this is sometimes turning on alarms of agencies built to monitor these issues.
In fact, these bridges are probably the single biggest concern when it comes to modern money laundering. With the help of cross-chain bridgets, these funds are chain hopping and are nearly impossible to trace.
-
Stricter policies in the EU
In the past, the maximum limit for cash payments was €10,000 in the EU, but the member states had an option of lowering the maximum limit. This means that, since they couldn’t go any lower but only higher, they had a standard that they had to abide by but were free to do more.
It’s also no surprise that there are some countries that pose a higher risk. There’s the high-risk index that is available to all EU regulatory bodies and financial regulators, as well as local governments. This allows them to enhance due diligence measures when transactions are conducted from these countries.
Most importantly, even though this is hardly something new, there are some obliged entities (banks, real estate agencies, casinos, merchants, etc.) who play a central role in the anti-money laundering process.
Lately, the list has been expanded to include traders of luxury goods, professional football clubs, and agents. This is mostly because the transactions in these fields are so ludicrous that it would be pretty easy to hide anything.
-
The results are already noticeable
According to numerous reports, crypto laundering is already dropping in volume and intensity.
There are multiple factors behind this decline, ranging from regulatory bodies to new regulations that increase transparency in this field. Technologies like blockchain bridges and gambling services are just some concepts worth paying attention to.
Another thing worth paying attention to is the evolution of DeFi, which has resulted in a far higher transparency. Now, while it’s true that this evolution venue makes the entire field more trustworthy and, thus, more appealing to potential investors, we have to point out one thing – without the regulation, this development would be a lot slower.
One more effect of these stricter policies (and the need for greater crypto security) is the rise in the popularity of sophisticated threat actors. These help government bodies and regulators identify and recognize threats, which improves their time to action.
This is especially important because policies are one thing, and enforcing them is something else entirely. With these diagnostic instruments, and advanced artificial intelligence (AI) technology, it is finally possible to enforce a higher level of oversight.
It’s also worth mentioning that a part of the reason might be the fact that the crypto trading volume has dropped, in general.
-
Battling funding for global terrorism
Now, one of the reasons why this year we might see a significant increase in these policies is the fact that the public attention has started to pay attention to the source of funding for militant groups all over the globe.
Some of these groups even managed to raise as much as $130 million in the US alone over the past few years, which is an alarming statistic.
In the near future, DeFi was the simplest and safest way to send your money to terror groups that you supported completely anonymously. This may sound a bit strange, but you have to remember that there were a lot of people from the West (especially young people) who were ready to drop their comfortable lives in order to join ISIS.
The problem of radicalization of people in the West is not slowing down, but if there’s one thing that regulators are trying to clamp down on, it’s definitely using crypto as a method of doing this. At present, agencies can trace accounts that are sending money to these groups and shut them down.
One of the reasons why this was so enticing is the fact that anyone can set up a cryptocurrency wallet without having to undergo a check. The addresses are pseudonyms, which allows one to send or receive funds without revealing their identity.
-
Responsibilities of FIUs
According to the latest rules and regulations, each member state had to establish a financial intelligence unit (FIU). This is a specially trained financial government body that’s designed to track online financial transactions and, more importantly, supervise reports from obliged entities.
Now, the only way for the FIUs to effectively do their job was to give them direct access to administrative, financial, and law enforcement information. This was not an easy thing to conduct since it included tax information, assets frozen due to financial sanctions, crypto-transfers, and more.
Still, FIUs are not enforcing these rules. Their job is to simply disseminate information to competent authorities. Now, in the near future, there’s an initiative that’s supposed to give FIUs the right to withhold or suspend consent to a transaction. This is relatively far from being passed, but there is a framework for this in the making.
In 2024, anti-money laundering policies and regulations will be even stronger
The latest political events, the growth of the popularity of crypto, and the number of population using these platforms are more than concerning enough for financial institutions. Only after the explosion of crypto did it become evident how these legacy financial organizations were ill-equipped to handle crypto transactions (and digital money, in general). Fortunately, they’re currently doing their best to catch up.
Photo Source
