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Felicia Tan
June 29 19:36

CipherTrace: 74% bitcoin transactions carry the risk of money laundering

About 74% of Bitcoins in interchange transactions in 2019 were moving across borders. This carries the risk of money laundering under conditions of insufficient KYC/AML measures and puts banks at risk, according to experts of analytical company CipherTrace.
They have analyzed how the implementation of the Financial Action Task Force (FATF) recommendations for the cryptoindustry will affect banks that are increasingly involved in servicing industry participants.
FATF published new rules for virtual asset service providers (VASPs) in June last year. The organization took 12 months to implement these rules.
Having studied KYC procedures from 500 leading VASPs, the company's specialists assessed 57% of them as weak or insufficient. A year ago, this figure was slightly higher - 67%, CipherTrace recalled.
The cross-border nature of bitcoin, with insufficient KYC/AML measures, carries a high risk of using cryptocurrency for money laundering, the company believes. Criminals are constantly looking for new loopholes and quickly use them, analysts said.
Participation in a VASP transaction with weak or missing KYC/AML procedures puts the bank's regulators at risk, both buyer and seller of the cryptocurrency, if the transaction involves fiat money. CipherTrace estimates that a typical large U.S. bank handles over US$2 billion in cryptocurrency-related payments per year without identifying them as such.
The company's specialists believe that the banks alone cannot cope with this problem, it is necessary to strengthen the appropriate measures on the part of the cryptoindustry.
Earlier, CipherTrace introduced Armada's tool to identify VASPs bank payments potentially related to money laundering.