Home Business Regulation FINMA anti-money laundering rules, step to securing cryptocurrency

FINMA anti-money laundering rules, step to securing cryptocurrency

FINMA anti-money laundering rules will be made stricter after the regulators made a proposal on Friday to review anti-money laundering rules on crypto transactions.

According to the proposal, clients will be required to provide a means of identification for crypto transactions above 1,000 swiss francs unlike before when transactions above 5,000 required client identification.

According to FINMA, the new rule is necessitated because of the vulnerability of laundering in the crypto space. The newly proposed FINMA anti-laundering rules will align with the “international standards” approved in mid-2019 indicating the Financial Action Task Force’s (FATF) directive from last June.

Also, Financial Action Task Force’s (FATF) that act as a watchdog against money -laundering on the international scene has approved crypto transaction of not more than $1,000 for unidentified clients. This translates to the fact that crypto exchange companies would be required to record details of people who want to complete crypto transactions above $1,000 likewise the receiver.

To discuss this development, a public consultation will hold later in 2020 regarding the new $1,000 crypto transaction limit.

FINMA anti-money laundering rules similar to AMLD5

European Union in January began implementation of its own Fifth Anti Money Laundering Directive (AMLD5) requiring crypto firms to follow enhanced know-your-customer (KYC) programs and reporting obligations.

The directive which started being implemented from Jan 10 required that crypto firms, custodial wallets, implement baseline AML procedures, as they are said to be filling what is termed a regulatory void.

However, different countries are trying different approaches to ramp up AML efforts which creates many problems for crypto firms with operations in different jurisdictions. Europe is beginning to get ready for strict crypto regulated space as firms were already folding up before the implementation of the law.

Money laundering and cryptocurrency

Owing to crypto characteristics, it can be used to aid illicit activities as believed by countries and stakeholders against the digital assets. However, the overall effect of crypto on money laundering is meager compared to cash transactions.

Reportedly, in 2019, a meager $829 million in bitcoin has been spent on the dark web amounting to 0.5% of all Bitcoin transactions. Using Blockchain technology for detailing public record of each transaction, it helps to manage and curb risks of financial crimes in cryptocurrency including Bitcoin money laundering.

Muhaimin Olowoporoku
Muhaimin is a journalist and a crypto enthusiast. He believes in the Africa project and sees blockchain technology as a possible solution alongside developmental journalism


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