AMLAnti-Terrorist FinancingKYC

Cryptocurrency, Financial Crime and Regulation

By March 19, 2015 No Comments

The recent HM Treasury publication, “Digital Currencies: response to the call for information”, reported that 80% of respondents believe digital currency requires a form of regulation. In addition, due to the anonymous nature of digital currency, participants acknowledged that money laundering, terrorist financing and sanction evasion can be readily facilitated by cryptocurrency.

Whilst it is argued that digital currency is regulated via mathematical algorithms and that the central ledger allows law enforcement agencies to track criminal activity, external regulation will prevent criminal activity before it occurs. In addition, the fallout from the HMT publication indicates that it is just a question of when, not if, regulation will be introduced.

Given that regulation appears to be imminent and that the majority of regulatory concerns stems from the anonymous nature of cryptocurrency, digital currency companies could benefit from researching and preparing for the implementation of know your customer (KYC) procedures.

Establishing KYC procedures in advance of government regulation will have a number of positives for cryptocurrency firms. For instance, not only will digital currency firms be building a safer business environment by proactively preventing financial crime and terrorism, but they will also have a solution readily in place when government regulation is introduced.


Digital Currencies: Response to the call for information


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