The Council of Europe, the region’s human rights and democracy organization, has called on all member countries to tackle money laundering of digital assets.
The council was formed in the aftermath of World War II to champion democracy, the rule of law and human rights in the region. He has specialist committees that deal with specific issues within his mandate, including Moneyval, through which he issued the warning in a recent 38-page report. Moneyval focuses on the fight against money laundering and the fight against the financing of terrorism.
In the report, Moneyval acknowledged that the emerging virtual asset industry and the growing use of digital currencies is becoming a significant challenge to combat money laundering, as traditional custodians have little control over the industry. And while European authorities have made great strides in monitoring this sector, rapidly emerging sub-sectors such as DeFi have presented new challenges.
One of the main obstacles to the application of AML and CFT regulations is the cross-border nature of most digital asset entities and networks.
“Cooperation in surveillance in this field is in its infancy and does not yet keep up with the rapid development of technology,” noted Moneyval President Elżbieta Frankow-Jaśkiewicz.
“It is well known that money launderers have abused cryptocurrencies since their inception a decade ago, initially to transfer and conceal the proceeds of drug trafficking. Nowadays, their methods are becoming more and more sophisticated and on a larger scale.
Frankow-Jaśkiewicz said digital assets are used to launder the proceeds of fraud and corruption and for tax evasion, noting that there are smaller digital asset projects that are created for the sole purpose of bleach. Larger projects see heavy market manipulation, “which is a major predicate offense for money laundering.”
Frankow-Jaśkiewicz promised that Moneyval will continue to strengthen its working methods and priorities to help its members fight digital asset money laundering more effectively. It has also partnered with many other agencies across Europe to build its capacity to tackle this vice, including the Financial Action Task Force (FATF).
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