Virtual Currencies – Regulation and Terrorist Financing Risks

Jennifer Hanley-Giersch – Managing Partner Berlin Risk Advisors GmbH, Berlin – published her new article on ACAMS Today (EU) on 24 August 2020.

The rise of bitcoin and other virtual currencies poses new challenges in the fight against money laundering and terrorist financing (ML/TF). With virtual currencies, users can make global payments that are beyond the control of financial regulators and security authorities. In addition, there is a growing risk of terrorist financiers evading state surveillance and tapping into these new sources of funding.

The article describes the vulnerabilities faced by businesses dealing with virtual currencies and outlines the regulatory developments by the Financial Action Task Force (FATF) and the EU. In addition, it sets out initial insights from the ongoing policy discussion in Germany based on the results of a recently published study. Finally, it presents key points from the European Banking Authority’s (EBA) revised ‘Risk Factors Guidelines’ on the newly integrated due diligence requirements linked to virtual currencies.

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