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Falcon Private Bank Singapore Branch Shut Down Over Money Laundering Concerns

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The financial relationship between Switzerland and Singapore has come under even more pressure than before. Singapore central bank officials forced Falcon Private Bank to shut down immediately. This is a direct result of the ongoing money-laundering operations in the country, and Falcon Private Bank is the second Swiss financial institution forced to close its doors. … Continue reading Falcon Private Bank Singapore Branch Shut Down Over Money Laundering Concerns

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Axis Bank Facilitates Banned Banknote Money Laundering In India

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The banknote ban in India is causing some rather unexpected results. Axis Bank’s Noida branch suffered from a similar incident as what happened to Wells Fargo customer not took long ago. Bank employees opened fictitious bank accounts to deposit a lot of money, allowing them to bypass the current demonetisation plans. Banks remain the perfect … Continue reading Axis Bank Facilitates Banned Banknote Money Laundering In India

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Legal Eagles Continue to Contemplate on Whether Bitcoin Is Money or Not

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Bitcoin, when introduced was compared to any other in-game currency which didn’t hold any value in the real world. But few years down the line, the cryptocurrency proved false notions wrong by becoming one of the most valuable financial assets. Bitcoin works differently from fiat currencies as no government or central bank is responsible for … Continue reading Legal Eagles Continue to Contemplate on Whether Bitcoin Is Money or Not

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BTC-E Is Responsible for Laundering 95% of all Ransomware Proceeds

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Most people are aware of how ransomware works these days. After getting infected with malicious software, victims have to pay a Bitcoin sum to get their files restored. One question hardly anyone knew the answer to was how the criminals cashed out these Bitcoin proceeds. As it turns out, 95% of all collected funds were sold on the BTC-E exchange. That is a very disturbing development, especially when considering how the platform suffered from a major outage recently.

Converting illegally obtained Bitcoins to regular money is not an easy feat. Even though Bitcoin is not anonymous, it is hard to link a user’s identity to online transactions. In most cases, criminals sell Bitcoin through exchanges. In other cases, they use peer-to-peer trading platforms, such as LocalBitcoins. It appears developers of ransomware mainly prefer using the BTC-E exchange. These findings are part of a recent investigation by Google.

BTC-E Attracts Ransomware Money Launderers

It is quite disconcerting to see BTC-E mentioned in this regard. The company operates one of the oldest cryptocurrency exchanges in history. While they never generated much volume, they are a respected platform as part of the community.That may come to an end sooner rather than later, though. According to Google, 95% of all ransoms were laundered through the BTC-E exchange. It is unclear which fiat currency was used to convert the BTC balances to cash, though.

It is unclear how Google came to this conclusion, unfortunately. Moreover, these findings won’t matter all that much, as BTC-E is a Russian exchange. Very few countries have a good relationship with the Eastern European country these days. Even fewer have any legal leeway there to press charges. Law enforcement agencies can’t do much about this situation, that much is evident. At the same time, the question becomes whether or not BTC-E is a cog in the money laundering machine for criminal proceeds.

Rest assured the ransomware threat will not diminish anytime soon. Even though BTC-E will be scrutinized from now on, there are other ways to convert illegally obtained bitcoins. Criminals won’t use BitMixer.io, though, as that popular tumbling service shut its doors earlier this week. It is evident things are changing in the world of Bitcoin and cryptocurrency. Making illegal activity subject to more scrutiny will help restore the public image of the world’s leading cryptocurrency.

Header image courtesy of Shutterstock

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DEA Report Confirms Bitcoin is Used for Trade-based Money Laundering Schemes in China

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Bitcoin has been associated with money laundering for quite some time now. Most of these claims are bogus and have never been proven in an official manner. A new DEA report shows Bitcoin is certainly involved in a Chinese laundering scheme. More specifically, the world’s leading cryptocurrency “facilitates” trade-based money laundering schemes. It is an effective tool to bypass capital controls.

It is always interesting to see these negative reports related to Bitcoin. Ever since the cryptocurrency came to market, it has been associated with nefarious activities. In some cases, these remarks have proven to be true. Other times, there is nothing but speculation to make BTC look bad. The latest DEA report is rather condemning, to say the very least. Everyone knows how Bitcoin is pretty popular in China.

DEA Report Condemns Bitcoin Again

Even after all local exchanges halted CNY trading, there is still a growing demand for cryptocurrency. It now seems there is a good reason for it. More specifically, the DEA claims criminals launder funds using Bitcoin. Mainly Chinese firms are involved in this scheme. Companies manufacturing goods accept BTC and it can be used to circumvent capital controls.

As one would expect, there isn’t much credible information to go on. No figures are shared, but that is to be expected. The DEA report does include details on how users obtain holdings through regulated exchanges. It is a bit flimsy in terms of linking it to malicious activity, though. Then again, we will find out more information over the coming weeks, hopefully.Whether or not that will happen, remains to be seen.

It is evident Bitcoin activity cannot be stopped regardless of regulation. More specifically, regulators can only go after centralized entities. This includes Bitcoin brokers and centralized exchanges. While Bitcoin is a viable tool to circumvent capital controls, it remains to be seen how many people use it for this specific purpose. China will remain a key factor in Bitcoin activity. Unfortunately, it seems to be for nefarious reasons first and foremost right now

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Mark Haefele of UBS Group AG: Bitcoin Not “Considered a Viable Currency to Invest In”

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In an interview with Bloomberg, the chief investment officer of the world’s largest wealth management company, UBS Group AG, has declared his scepticism of Bitcoin and other cryptocurrencies. For Mark Haefele, the lack of government regulation over Bitcoin is a cause for concern, as is the size of market capitalisation of cryptocurrencies in general. He stated that the sum total of all cryptocurrencies is “not even the size of the smaller currencies” that UBS would allocate portfolio space to.

The UBS Group AG officer also stated that there were risks inherent with Bitcoin that did not affect other currencies. These made the company adding portfolio allocations to cryptos unlikely anytime in the near future. Haefele highlighted the damage that a terrorist attack funded by Bitcoin could do to the market, particularly if it happened on US soil:

All it would take would be one terrorist incident in the U.S. funded by Bitcoin for the U.S. regulator to much more seriously step in and take action. That’s a risk, an unquantifiable risk, Bitcoin has that another currency doesn’t.

He also mentioned the oft-repeated concern of high-finance folk that cryptocurrency could easily be used for money laundering. This, he feels, is a situation that’s “unlikely to persist forever”. Clearly, Haefele thinks that greater government regulation is on the way soon which could detract from one of the main value propositions of BTC.

He concluded with some general thoughts on investing in cryptocurrency, hinting that it was essentially impossible to determine where the top could be. For him, this is a negative quality as there is no clear exit point for investors. For proponents and supporters of cryptocurrency, however, the practically limitless upside potential is what attracts them to the space. In Haefele’s own words:

The thing that always strikes me about these, quote unquote, investments is not really when you would get into it but when you would get out of it. So how do you know when to get out of a bitcoin investment?

 

 

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UK Treasury Plans to Regulate Cryptocurrency Exchanges

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It comes as no surprise that governments don’t like Bitcoin and banks and financial institutions like it even less. They cannot control it, track it, profit from it, or tax it. To justify their fears and loathing politicians and bankers will use phrases like ‘fraudulent’, ‘criminal’, and ‘bubble’ to deter the public from gaining an interest in cryptocurrencies.  This week the UK Treasury became the latest to crack down on crypto in what it calls a bid to stop crime such as money laundering and tax evasion.

The government is seeking to introduce regulations for the cryptocurrency market to force traders and investors to reveal their identities and report suspicious behavior. The recent surge in interest and price of Bitcoin has forced the Treasury to take a closer look and attempt to bring it in line with current anti-money laundering and counter-terrorism policies.

In a statement, Economic Secretary to the Treasury Stephen Barclay said:

“The UK Government is currently negotiating amendments to the anti-money-laundering directive that will bring virtual currency exchange platforms and custodian wallet providers into Anti-Money Laundering and Counter-Terrorist Financing regulation.”

The EU-wide plan would mean that crypto exchanges would have to do due diligence on their customers and report suspicious activity to the relevant authorities. At the moment things are pretty vague but the move has been designed to end the anonymity surrounding crypto trading. A Treasury spokesman told the Telegraph:

“These new forms of exchange are expanding rapidly and we’ve got to make sure we don’t get left behind – that’s particularly important in terms of money-laundering, terrorism or pure theft. I’m not convinced that the regulatory authorities are keeping up to speed. I would be surprised if the committee doesn’t have an inquiry next year.”

Last week the US Internal Revenue Service made similar moves demanding details on customers and transactions from Coinbase for tax purposes from profits of crypto trading. The UK, while asserting that the moves are to prevent crime, has a similar stance. “We have clear tax rules for people who use cryptocurrencies and like all tax rules, these are kept under review” stated a Treasury spokesman.

Bitcoin seems undaunted by regulation and attempts to control it and has risen fourfold since China’s block of cryptocurrency exchanges in September. So far attempts to regulate it by sovereigns and central banks have not hindered the monumental price rise that cryptocurrencies have witnessed in 2017.

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UK Government to Enlist the Help of Spies to Crack Bitcoin’s Enigma

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Following hints that an increase in cryptocurrency regulation is coming to the British Isles, the government there have enlisted a curious team to help them understand the space better. The Telegraph report that the UK’s Treasury department have called upon their domestic spy agency to better appreciate the risks posed by the permission-less digital currency.

The deputy director for cyber skills and growth at the National Cyber Security Centre, a department of the Government Communications Headquarters explained to the British newspaper:

We are interested in anything that could affect the country, so Bitcoin is a major thing now.

The agency is said to be calling on mathematicians, academics, and those already familiar with the cryptocurrency sector to help government workers further understand the space.

The UK government recently announced that they were considering a regulatory move against Bitcoin. At present, exchanges fly under the legislative radar. However, based on EU money laundering laws, it’s likely that a “know your customer” approach will have to be followed by vendors in the future. This would mean that customers would need to provide full identification to use any exchange.

Whilst the Telegraph article and Chris Ensor from the NCSC have dressed the research probe up as an attempt to protect citizens from the “risks” of Bitcoin, it’s much more likely that the moves are aimed at protecting the national coffers. In the wake of Brexit, the government are trying whatever trick they can get away with to generate extra more revenue. This has even gone as far as to include taxation on the bonus free bets bookmakers give to loyal customers.

Rather than stop the problem of tax avoidance, the move against crypto will likely drive those wishing to engage in illicit activities like money laundering towards privacy coins such as Monero, Verge, Z-Cash, or Dash.

As the price of Bitcoin has risen so much during 2017, the sums of money potential being moved or hoarded without the government’s knowledge is becoming an ever-increasing concern to law makers across the globe. Earlier this month, the Guardian reported on the UK’s moves to legislate cryptocurrency. Interestingly, however, the Treasury are distancing themselves from the money laundering angle at present but they do contend that the problem is likely to get worse. They told the newspaper:

There is little current evidence of them [cryptos] being used to launder money, though this risk is expected to grow.

With some commentators predicting over six-figure Bitcoin valuations in the coming years, cash strapped politicians would just love to try and lay claim to some obscene percentage of the gains made on the silly digital money you bought five years ago when they were all too happy to dismiss it all as nonsense. It’s likely we’ll see greater measures to identify those holding Bitcoin as we move into 2018.

 

 

Image: PixaBay

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American Woman Arrested for Laundering Bitcoin to Fund Islamic State Operations

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There have always been allegations tying Bitcoin to terrorist funding. So far, there has been little to no evidence to back up such claims. It seems that situation has come to change in the past few days. An American woman was arrested and accused of money laundering bitcoins. Said cleaned funds were then used to fund Islamic State operations. It is a very serious allegation, although it remains to be seen if anything will come of it.

It is always interesting to see claims of Bitcoin and terrorist financing. Various governments made such outrageous claims in the past without evidence. One woman in New York, however, may have done exactly that. 27-year-old Zoobia Shahnaz has been accused of money laundering with Bitcoin to fund Islamic State. It seems she took out fraudulent loans to buy bitcoins online. By converting it to BTC and then cashing it out again, she was able to wire money to the Islamic State.

Money Laundering for Islamic State is a bad idea

It is pretty interesting to see how this situation unfolded. More specifically, the financial system allowed her to take out fraudulent loans and send wires to known terrorists. Bitcoin’s involvement is rather unfortunate at this point, rather than being a catalyst. After all, it is the job of banks to prevent fake loans from getting approved. Moreover, they should also block any wire transfers to Islamic State operatives. For some reason, financial institutions have failed miserably on both accounts.

Surprisingly, Zoobia Shahnaz does not seem to have any “tangible” allegiance to Islamic State. While she was born in Pakistan, she worked at a Manhattan hospital until recently. Afterward, she booked a flight to Pakistan with the intent to travel to Syria. It is possible she was “turned” before her trip, although that has not been confirmed at this point. At the time of her arrest, she had $9,500 in cash on her at JFK Airport. Moreover, her browser history clearly shows searches for Islamic State propaganda and content.

According to her lawyer, the money was sent overseas to help Syrian refugees. Very few people actively buy that story for obvious reasons. Shahnaz faces up to 30 years in prison, depending on which of the charges will stick. Again, the involvement in Bitcoin is rather unfortunate, but the world’s leading cryptocurrency is not to blame. If the banking system hadn’t failed, the money laundering wouldn’t have been possible, to begin with.  It will be interesting to see if she will be convicted of anything in the end.

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Bank of England Governor Carney Calls for Transparency in Crypto Trading

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Bank of England Governor Mark Carney said cryptocurrency is often used for money laundering and other illegal activities. The statement was made when he spoke about the need to inject more transparency into the trading process.

No Anonymity for Cryptocurrency users

According to Bloomberg he told a committee of lawmakers when speaking to the UK Parliament on Tuesday;

“A lot of the underlying use for these currencies has been illicit activity, particularly money laundering, potentially closing a chain which at somewhere along it had some illicit activity. One doesn’t have anonymity for bank account transactions, why would you for cryptocurrency transactions?”

Carney who chairs the Global Financial Stability Board said he wasn’t talking about people who are speculating in the crypto marketplace but talked about the concern of international regulators and that he expects the issue of buyer anonymity to be on the agenda at the upcoming G20 Meetings. Carney went on to add;

“At the G-20 level, we face some decisions in the future about to what extent should cryptocurrencies in general – and bitcoin is included in that – should they be integrated into the formal financial system. How easy should it be to convert bitcoin into sterling or dollars.”

Bank of England plans future cryptocurrency

Carney made no mention during this speech about the Bank of England’s plans already in motion to create its own digital currency. These plans laid out in a staff working paper published in 2017 predicted that a digital currency may increase the gross domestic product of the Union.

According to the authors, the Bank of England will be capable of increasing the country’s GDP permanently by about 3 percent. In order to make such a significant change in the economy, the central bank would have to issue enough digital currency units to equal 30 percent of the current GDP against government bonds.

The paper titled “The macroeconomics of central bank issued digital currencies” is authored by John Barrdear and Michael Kumhof. It was presented by Ben Broadbent deputy governor of the Bank of England to the Lords Economic Affairs Committee.

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Europol Estimates Cryptocurrencies Account for 4% of Illicitly Trafficked Cash in Europe

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Criminals in Europe are using cryptocurrencies to launder as much as $5.5 billion (£4 billion) in illegal money according to the head of Europol, the EU’s policing agency.

Director of Europol, Rob Wainwright, estimates that around 4% of all criminal proceeds in Europe are being funneled through cryptocurrencies like Bitcoin — and he expects this figure to increase. Given that the agency’s standing estimate for the total amount of illicit cash circulating Europe is around $138 billion (£100 billion), this would put the amount being trafficked in cryptocurrencies at $5.5 billion.

“It’s growing quite quickly and we’re quite concerned,” Wainwright said in an interview with the BBC. He went on to add that police find it harder to stop illicit cryptocurrency transfers because they have no way to freeze crypto wallets in the way they could freeze a traditional bank account: “They’re not banks and governed by a central authority so the police cannot monitor those transactions,” he said. “And if they do identify them as criminal they have no way to freeze the assets unlike in the regular banking system.” To make matters worse, Europol has determined that money mules are being used to cash out, converting Bitcoin into fiat currencies in smaller amounts making it harder for police to track.

Speaking to the industry in general, Wainwright said the following: “They have to take a responsible action and collaborate with us when we are investigating very large-scale crime. I think they also have to develop a better sense of responsibility around how they’re running virtual currency.”

Law enforcement officials across the board are increasingly concerned about the use of cryptocurrencies by organized criminals. The coins are not directly regulated in Europe and it is still unclear among most financial regulators how they should be classified under existing laws. The UK is considering making amendments to EU anti-money laundering rules to make it apply to cryptocurrencies.

With regard to money laundering, Bitcoin appears to be the most frequently used cryptocurrency, likely because of its higher profile. But officials have also voiced concerns about others like Monero and Zcash, which go to even greater lengths to conceal the identities of those trading in them. Overall, Litecoin and Dash are actually second to Bitcoin in terms of trading volume on the dark web.

Outside policing agencies like Europol, others governmental organizations are more enthusiastic about the future of cryptocurrencies — in particular, blockchain technology. The European Commission announced in a press release earlier this month that it is launching the EU Blockchain Observatory and Forum, taking a great step forward aimed at “uniting” the economy around Blockchain. The project will bring together various sectors, including regulators, industry experts, and politicians, to develop new use cases. 

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Bitcoin Isn’t the Currency for Money Laundering, US Bank Pays $613m Fine

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Money laundering has always been a big problem in the financial sector. Turning “dirty” money into “clean” money makes it nearly impossible to trace criminal activity. One could argue money laundering is a sold as the banks themselves. US Bancorp is fined $613m to settle “willful” violations of the Bank Secrecy Act. It is once again evident financial institutions are the go-to solution to launder money. Cryptocurrencies such as Bitcoin, on the other hand, are very small fish in this cesspool.

Addressing money laundering problems is not easy by any means. With so many people involved in these processes, it’s only natural some transactions go by unnoticed. Banks staffers often fail to recognize or report suspicious transactions. In the case of US Bancorp, it will cost them a hefty penny. With $613m in fines to be paid, some bank members will be to blame. It also shows how relatively easy it is to launder funds through the banking system. There are quite a few institutions who either don’t flag transactions or do not bother to deal with the reporting side of things.

US Bancorp Fined for Money Laundering

Most of the fines will be paid to the US Treasury. The remainder will go to FinCEN, The Federal Reserve, and the Office of the Comptroller of the Currency. While such a fine is steep, it’s usually a drop in the bucket. Entities such as US Bancorp can make a lot more money from processing these illicit transactions like normal. They collect fees for every transaction, after all. This fine will not necessarily make any big dent in their earnings. More worryingly, people will probably forget US Bancorp was even involved in this scandal in a few months from now.

It is uncanny how these are the same banks who tell people Bitcoin is a tool for criminals and terrorist. Unlike the systems used by US Bancorp and consorts, Bitcoin is as transparent as it can get. There is a degree of pseudonymity, but people can flag transactions in real-time. All information other than users’ identities is public and traceable. Converting Bitcoin to real money needs to be done through brokers or exchanges. These companies perform checks to prevent money laundering as well. It is very cumbersome to cash out crime proceeds with Bitcoin as of right now.

Even then, the converted money is still processed by banks. If they do not perform proper AML checks, bitcoin isn’t to blame for their shortcomings. US Bancorp and consorts need to be punished far more severely for failing to adhere to regulatory guidelines. They have all of the information on hand to flag, track, and identify suspicious behavior in a few minutes. Why they aren’t doing so is anybody’s guess right now. Money laundering will always be facilitated by the banking system.

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British Man Charged With Using Bitcoin to Launder 11.5 Million Euros

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A British man has been arrested on money laundering charges in Holland. He is alleged to have been running a “money cleaning” service for clients trading on the dark web between the years 2014 and 2016. The Dutch Public Prosecutor demanded on Wednesday that he serves at least five years in prison.

Funds Likely Came From Illicit Sources

According to NL Times, the laundered money is thought to have come from various dark web dealings in illicit goods. The man accused is a 38-year-old British man living in Amsterdam. It’s alleged that he was responsible for “cleaning” over 11.5 million euros during the years he was active. It’s thought that he received Bitcoin from dealers of narcotics and other contraband items and sold them using his own bank account. He then withdrew the funds in local currency and returned them, minus a cut for himself, to the original party.

The Public Prosecutor alleges that the man took an “unusually high” percentage of the funds. It’s thought that he charged between five and eight percent for carrying some of the burdens of risk for his clients. The accused and his spouse were living predominantly off their ill-gotten gains. The Prosecutor added that neither of them earns much in the way of legal income.

Along with the charges of money laundering, the suspect is also thought to have been previously cultivating cannabis illegally. Photos on his computer of large cannabis plantations at his previous home support this. The Prosecutor stated:

“He thought he had seen a gap in the market and jumped into it… He started with a cannabis plantation, sold the harvest on the dark web and was paid in bitcoins. Soon he noticed that he no longer needed the weed to make a substantial turnover and a fine profit.”

The man accused is adamant that all those he dealt with over the years 2014-16 were law-abiding citizens. He refutes the allegation that they were involved in any illicit trade. It’s thought that the court will rule on the matter in early March.

Bitcoin and other cryptocurrencies have long been associated with money laundering. However, just because something illegal is possible using a certain tool doesn’t mean the tool ought to be forever tarred with that brush. It’s possible to murder someone with a lump hammer. Are all lump hammers associated with murder? No, of course they’re not.

Critics of Bitcoin love to play the money laundering card whenever they can. The fact is there are plenty more examples of money laundering that takes place using other forms of currency. Recently, US Bankcorp were forced to pay a hefty fine for the very same crime. Also, one of Bitcoin’s fiercest naysayers, Jamie Dimon of JP Morgan Chase, has repeatedly stated that crypto is only good for criminal use. This includes money laundering. Just weeks after making his famous “fraud” remarks JP Morgan themselves were charged with money laundering. Evidently, current money laundering laws are failing and it’s a cop-out to blame an innovative form of currency for their shortcomings.

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Japan: Do Criminals Prefer Cryptocurrencies or Fiat for Money Laundering? 669 Cases vs 347,000

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Japan’s National Police Agency said today that they received reports on 669 cases of suspected money laundering linked to cryptocurrencies from exchange operators between April and December of last year; This is just a tiny fraction of the total, as 347,000 money laundering cases were reported by traditional banks in the same time frame.

The data came after cryptocurrency exchange operators were ordered to report transactions suspected of involving money laundering following a revision last April to a law that intends to prevent the transfer of criminal proceeds. 

Of the 669 cases, it is likely that many involved “questionable transactions repeated frequently in a short span of time,” Nikkei reports. And it’s worth considering that these crackdowns are not necessarily a bad thing: Punishment that comes as a result of these charges could result in removing bad actors in the crypto-space.

Currently, in Japan, 16 cryptocurrency exchange operators are registered based on the revised law on payment services. Ensuring security measures has been a challenge in the industry. Just last month, Coincheck — which was waiting for government approval of its registration — failed to protect its users from the theft of around $540 million worth of NEM digital currency.

The Numbers

The proportion of suspected money laundering cases involving cryptocurrency in Japan — 669 — is a fraction of the fiat total for 2017. The large majority of cases came from banks and other financial institutions, totaling 346,595 cases, followed by credit card companies at 15,448 cases, and credit unions at 13,259 cases.

The figures are promising in the battle against international governments who claims that money laundering is a key sector to be targeted by increased regulations.

This news comes as Japanese Finance Minister Taro Aso is speaking on the inspections taking place within the exchanges, as the government continues to look for weaknesses in the system and attempt to determine the viability of blockchain technology going forward. According to Aso, inspections are mainly used to determine the internal management structure of organizations and are taking place “impartially,” as Japanese officials are trying to not impede the growth of the sector.

There have also been self-regulation talks within the crypto-space: It was reported just over a week ago that Japan’s two cryptocurrency industry groups are working together to form a self-regulating body. The Japan Blockchain Association and the Japan Cryptocurrency Business Association are expected to merge as early as April, with the intention of implementing further safeguards to protect traders and investors.

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More Crypto Companies Are Consulting Compliance Advisors in Attempts to Avoid ‘Bad Actors’

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2018 has seen a surge in business for compliance advisors that help crypto services like exchanges and ICOs verify customer identities and make sure funds are legitimate. These advisors are helping crypto-related business determine if the individuals and organizations they are transacting in cryptocurrencies with are not ‘bad actors’ — exposed to illicit activities or involved in other suspect behaviors.

The rationale behind this is to help make those in the crypto-space more compatible with financial institutions bound by KYC (know your customer), KYT (know your transactions), and AML (anti-money laundering) requirements. More and more companies, small and large, are familiarizing themselves with the ID checks and money source verifications of which are commonplace in the world of traditional finance, in attempts to head off potential future regulatory troubles.

“The start of Q4 to end Q4 [there was] a 10x increase in checks for crypto clients,” Eamon Jubbawy, the cofounder and COO of document verification business Onfido, told Business Insider. “We love the fact we can inject a bit of trust and security into an industry that is otherwise set up for potential criminal activity.”

Jubbawy said that the company is now doing millions of document checks for crypto clients, having verified investor documents from more than 200 countries in five continents. By ensuring that the necessary compliance procedures are in place, these crypto clients are able to confidently work with larger client bases — something which benefits all parties involved. These partners vary from small blockchain startups to bigger, more established players: Bitstamp — Europe’s oldest Bitcoin exchange — recently announced that it is working with Onfido after it was overwhelmed with the influx of new users at the end of last year.

“The guys who are coming to us are saying hey, we want to make sure the people who are investing are legitimate people rather than people who are looking to move around dirty money, can you verify they’re not on any terrorist watch lists or anything like that?”

Charles Delingpole, the CEO and founder of AML checking service ComplyAdvantage, has also seen an uptick in crypto-related business. Delingpole points out that the motivations for crypto companies to work with his organization and others like Onfido is simple: “No company wants to deal with North Korean drug traffickers, right?” he said. “No company wants to have a supplier who’s linked to corrupt Venezuelan politicians exporting cash.”

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These Are The Reasons Why Bill Gates Is Wrong About Cryptocurrency

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It was widely reported yesterday that the planet’s second richest man, Bill Gates, is no lover of Bitcoin and other cryptocurrencies. The founder of Microsoft claimed that in their short existence digital currencies have already been a “fairly direct” cause of deaths.

Gates Slams Cryptocurrencies over Connections to Crime

During an “ask me anything” session on Reddit yesterday, Gates stated that cryptocurrency has been responsible for various evils. Amongst these the multi-billionaire alleges that Bitcoin and other digital coins have been the cause of many deaths:

“Right now cryptocurrencies are used for buying Fentanyl and other drugs so it is a rare technology that has caused deaths in a fairly direct way.”

He also cited money laundering, tax evasion and terrorist funding as reasons why he’s not in favour of the revolutionary payment methods. He went on to claim that it’s a good thing when governments are able to root out tax dodgers.

In Gates’ blanket damnation of cryptos, he neglects to acknowledge several things, however. Firstly, and most strikingly, is the fact that every crime he mentions is equally possible using paper money. As long as bank notes have existed, people have dealt drugs, laundered money, and avoided taxation using them. The fact that a crime is made possible because of a technology or tool does not make it inherently evil. Assuming so would be akin to affiliating Gates’ own company with terrorist organising and darkweb drug dealing just because some of those that have carried out such acts used a Windows operating system at some point during their crime. Obviously, such an accusation is absolutely ridiculous.

Next, it can be argued that the allegations about avoiding taxation and cryptocurrencies contributing to deaths are contradictory. After all, is it not because of the tax system that the US is able to fund the bombing of Syria in which over 10,000 civilians have been killed in this year alone?

Of course, taxation pays for positive things too, just like cryptocurrencies facilitate many societal goods. Gates overlooks near-instant cross-border payments, giving access to cheap and easy to use banking-style services to those in the third world who lack them, and the removal of leech-like middlemen from global financial institutions when he condemns cryptocurrency. Frankly, this refusal to acknowledge the good as well as the evil is incredibly narrowminded.

Finally, Gates completely overlooks the fact that people will find a way to take drugs irrespective of the payment method they use to buy them. People took drugs long before cryptocurrency was invented and would continue to do so if the powers that be were somehow able to stamp out the use of Bitcoin et al. entirely. Cryptocurrency may well have facilitated the sale of drugs on the darkweb but thanks to eBay-style rating systems on pages like now-defunct AlphaBay and others, sellers of bad quality, dangerous substances are unlikely to last long in the almost free online markets. Compare this to dealers pushing god knows what on street corners across the globe to anyone with enough paper dollars to buy from them.

Evidently, there is a problem when people wish to escape from reality in such a way that they’re willing to put potentially toxic substances into their bodies. However, chastising the method they used to pay for them does nothing whatsoever to tackle the issue. Societies like the Netherlands have proved that when given access to clean narcotics and safe places in which to use them, the numbers of those taking intoxicating substances (and subsequently dying from it) decline. It’s frankly absurd to blame cryptocurrencies for the myriad of issues that stem from years of prohibition and the demonisation of drug users.

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Monero Is the Favorite Cryptocurrency of Cyber Criminals, Study Finds

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A study found that cybercriminals launder $80-$200 billion a year and are moving away from Bitcoin as Monero offers greater anonymity.

Cybercriminals Launder Up To $200 Billion Each Year, Says Report

Virtualization technology-focused security firm security firm Bromium announced the findings of an independent study into the macroeconomics of cybercrime. “Into the Web of Profit,” a report released by the company, concludes that cybercriminal proceeds make up an estimated 8-10 percent of total illegal profits laundered globally, which amounts to $80-$200 billion each year.

Additionally, the report found that virtual currencies are now the primary tool used by cybercriminals for money laundering. Monero, a cryptocurrency that provides greater anonymity, is becoming criminals’ favorite as they move away from Bitcoin.

Dr. Mike McGuire, Senior Lecturer in Criminology at Surrey University and author of the report, said:

“It’s no surprise to see cybercriminals using virtual currency for money laundering. The attraction is obvious. It’s digital, so is an easily convertible way of acquiring and transferring cybercrime revenue. Anonymity is also key, with platforms like Monero designed to be truly anonymous, and tumbler services like CoinJoin that can obscure transaction origins. Targeted organizations must do more to protect their customers.”

The study also found that in-game purchases and currencies are spurring a rise in gaming-related laundering, as China and South Korea become hotspots for gaming-currency laundering; PayPal and other digital payment systems are employed by cybercriminals to launder money; and digital payment systems laundering often involves the use of micro-laundering techniques where multiple, small payments are made so laundering limits aren’t triggered.

Gregory Webb, Chief Executive Officer of Bromium, commented: “We invested in this research to instigate a meaningful conversation about how to disrupt the economic systems and poor security practices that enable cybercrime around the world; frankly because it’s far too easy for them.”

“Today it is easy for hackers to infect machines, steal data, and hold businesses and individuals for ransom or sell stolen IP because enterprise defenses are not fit for purpose. It is equally easy for them to wash that money and convert it into cash – and the rise in the use of unregulated, virtual currencies is making this even easier. We need to attack the problem in a different way. Law enforcement, the cybersecurity industry and both the public and private sectors need to be vigilant about disrupting cybercrime. Protecting applications that access sensitive data is an absolute requirement. We need a whole new approach to cybersecurity or these figures will continue to increase over time.”

While cryptocurrencies have become more popular within the cybercrime industry, it remains unclear whether the impact of digital currencies is large enough to attract the attention of regulators, given that the majority of criminal operations globally are still funded by fiat money, or cash.

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Europol Arrests Gang After Laundering €1 Billion Worth of Bitcoin

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The Spanish police authority announced the arrest of ‘Denis K.’, the suspected leader of a cyber-crime gang who allegedly stole up to 1 billion Euros from banks all around the country, according to Europol.

Ukranian-Russian Cybercriminals Caught After Laundering €1 billion Worth of BTC

As modus operandi, the gang made up of Russian and Ukranian nationals would gain control of banks’ network and servers by targeting bank employees with emails infecting their computers. Once inside the servers, the gang altered account balances and instructed automatic teller machines to issue cash.

The group also set up a Bitcoin farm as a means of laundering money, according to the authorities. After cooperation between police forces in the United States, Asia (Taiwan), and Europe (Romania and Belarus), as well as private cybersecurity companies, the suspected leader of the cybercriminal group was arrested in Alicante, a port city with approximately 750,000 residents.

The Ukranian-Russian criminal organization has been active since 2013, with members in 40 countries and carrying out attacks on 100 financial institutions, said Europol. The Interior Ministry of Spain, led by Mr. Juan Ignacio Zoido, said three other members of his organization were arrested.

The Interior Ministry of Spain added that the Alicante police seized €500,000 worth of jewels, two luxury cars during the raid, and two homes valued at approximately €1 million. The authorities have also frozen bank accounts associated with the suspects.

“With that level of access, the nefarious individuals authorize fraudulent bank transfers, raise the balances of mule accounts or command affected ATMs to spit out the money for them,”

said the statement from Europol, noting that the gang used the Russian mafia to coordinate the work of the ‘mules’ they used to extract money from cash points that they attacked. They switched to the Moldovan mafia from 2016 onwards.

The cybercriminal operation was able to accumulate about 15,000 Bitcoins as the money was converted into the cryptocurrency at exchange houses in Russia and Ukraine to be later transferred to their accounts.

‘Denis K.’, the alleged gang leader, would load prepaid cards with Bitcoin through financial platforms in Gibraltar and the UK, and then spend them in Spain on the aforementioned goods, such as cars and homes.

Crime is a topic often discussed within the cryptocurrency community as the money laundering tradition may be shifting from fiat currencies to digital assets. Recently, a Turkish gang has extorted 450 Bitcoins from a wealthy businessman. In February, four men linked to a Taiwanese gang were arrested by police for having allegedly stolen $100,000 worth of Bitcoin.

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Vancouver Police Push Government to Enforce KYC/AML Laws with Cryptocurrencies

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The Vancouver Police Department (VPD) has warned Canada’s federal government that cryptocurrencies are increasingly being used by organized crime to launder money.

The agency advises that checks and balances are necessary to monitor the digital coins, and pushes for the enforcement of amendments to legislation that would require crypto-related transactions be reported to the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC.

Increase in Police Filings

Police in Metro Vancouver saw a 350% increase in filings related to cryptocurrency from 2016 to 2017. As of January this year, the agency investigated 70 files, calculating a potential for 800 cases by the end of year — a 300% increase over 2017.

Because of these findings, police are growing increasingly worried that organized criminals — both domestic and foreign — will take advantage of the potential anonymity related to digital currencies, specifically to launder money.

The report noted that because of lack of regulation in Canada, services that operate in cryptocurrencies, like Bitcoin ATMs, don’t currently require the collection of customer details and place no limit on the amount of funds that can be transferred from one person to another.

“Given this lack of regulation, it is likely that Canadian organized criminals will use Bitcoin ATMs to launder their cash. However, we will likely also see foreign organized crime taking advantage of the lack of regulations,” the report read. “Any forward-thinking criminals will be exploring cryptocurrency and ATMs as an easier and more profitable alternative.”

According to Coin ATM Radar there are 63 Bitcoin ATMs in Metro Vancouver. Since many are owned by small, independent vendors, police are worried that they don’t follow Anti Money Laundering (AML) and Know Your Customer (KYC) verifications, which require the collection of personal information from users such as government-issued photo IDs and birth dates, the report read.

Bill C-31: FINTRAC Registration

The report accompanied a VPD-authored resolution to be brought before the Canadian Association of Police Governance. The resolution calls for the implementation of government amendments made to legislative Bill C-31, which passed in 2014 but was not brought into force.

Bill C-31 amended the country’s crime and terrorist financing act to include regulations for digital currencies. The bill requires any company wishing to transmit or convert digital currencies to register with FINTRAC, Canada’s financial intelligence unit.

“The lack of regulatory framework allows criminal groups to explore a myriad of ways that they can exploit Bitcoin ATMs and exchanges,” the report read. “They can commit fraud, launder money and turn Canada into a haven for international criminal funds. Implementing the cryptocurrency provisions from Bill C-31 would not eliminate these problems. However, they would restrict them at their source and severely limit their ability to flourish.”

Image from Shutterstock.

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Low Connection Between Cryptocurrencies and Organized Crime in Hong Kong, Report

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The Financial Services and Treasury Bureau (FSTB) in Hong Kong has released its 2018 Money Laundering and Terrorist Financing Risk Assessment Report.

The report comes as financial crimes are on the rise, and some are questioning what the city is doing to combat this. Businesses in and around Hong Kong — particularly ones involved with cryptocurrencies — are upset because they are being denied banking services on a large scale, primarily due to the banks fears of money laundering risks. 

According to the statistics, the number of ‘suspicious transactions’ in the finance world has quadrupled in the past six years, while at the same time convictions have gone down.

The FSTB’s report stresses that no specific regulation exists around trading of the coins, and that Money Service Operator (MSO) licenses only need to be obtained for money services conducted in fiat currenciesThe report advises that some tokens qualify as securities, while others are considered ‘Stored Value Facilities’ (SVFs), which apply to services offered by Paypal, WeChat Pay, and Alipay. Monitoring began in 2013, and since then police have received only 167 crypto-related reports (most of which related to ransomware). 

The big news here is that the government’s risk assessment for aforementioned SVFs are much higher than with cryptocurrencies. The Hong Kong Police Force (HKPF) notes that they see ‘no apparent sign’ of organized crime, money laundering, or terrorist financing related specifically to the trading of cryptocurrencies.

“Hong Kong is one of the world’s freest economies with a vibrant foreign currency exchange market and no capital controls. VCs are therefore not as attractive as in economies where people may try to circumvent currency controls or seek refuge from a high inflation rate,” the report reads.

ATMs, Exchanges, and Fraud

Despite this lack of a connection between the crypto-space and financial crime, police do closely monitor the number of Bitcoin exchanges and ATMs in Hong Kong, noting that seven such machines exist — although according to the Bitcoin Association of Hong Kong, the number may be closer to 15. Four exchanges are active in the city, though the report suggests that ‘they are not popularly used by people in Hong Kong.’

Fraud on social media appears to be particularly common. While the individual loss from such cases are only in the hundreds to thousands of Hong Kong dollars, the total loss to such schemes amounts to HK$6.4 million (about $815,000) in 2015 and 2016.

The report comes only two months after the Hong Kong government announced new measures to combat money laundering, aimed at company service providers and trusts. The updated measures introduce a new licensing regime and place a higher burden on those setting up shell companies and trusts.

Image from Shutterstock.

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