Switzerland’s Financial Market Supervisory Authority (FINMA) has issued a warning about the risks of money laundering associated with cryptocurrencies, including stablecoins. In its 2024 Risk Monitor report, the regulator highlighted the increasing use of cryptocurrencies for cyberattacks, payments for illegal dark web activities, and evading sanctions linked to geopolitical conflicts.
FINMA noted that stablecoins, in particular, have seen a significant rise in illicit transactions related to sanction evasions, further complicating anti-money laundering efforts. The regulator emphasized its broader efforts to combat money laundering risks, including onsite reviews, an overhaul of its audit program, and a focus on risk tolerance and management for entities with politically exposed customers or links to high-risk areas.
The warning from FINMA comes as no surprise, given the growing concerns about cryptocurrencies and stablecoins being used for illicit activities. Regulatory bodies globally have been flagging cryptocurrencies and related businesses for their potential links to money laundering and other illicit activities, prompting increased scrutiny and calls for enhanced oversight across jurisdictions.
Platforms like Binance, KuCoin, and others have faced scrutiny in connection with money laundering allegations over the years. Tether, the issuer of the world’s largest stablecoin USDT, has long faced accusations of facilitating money laundering and other illicit activities. The company has denied any wrongdoing, stating that it has seen “no indication” of an investigation.
The warning from FINMA highlights the need for stricter regulations and oversight in the cryptocurrency industry. As the industry continues to grow, it is essential that regulatory bodies take a proactive approach to combating money laundering risks and other illicit activities.
Predictions:
We can expect to see increased regulatory scrutiny in the cryptocurrency industry, particularly in Switzerland and other jurisdictions with significant cryptocurrency activity. This may lead to a decline in the use of cryptocurrencies for illicit activities, but it may also drive some cryptocurrency businesses to operate in jurisdictions with more lenient regulations.
The warning from FINMA may also lead to increased adoption of anti-money laundering measures in the cryptocurrency industry, such as more robust know-your-customer (KYC) and anti-money laundering (AML) protocols.
Overall, the warning from FINMA highlights the need for the cryptocurrency industry to take a proactive approach to combating money laundering risks and other illicit activities. By working together with regulatory bodies, the industry can help build trust and confidence in the use of cryptocurrencies.
