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Council of Europe calls on member countries to crack down on digital asset money laundering

The Council of Europe has warned its 46 members that they need to crack down on digital asset money laundering.

June 29th, 2022

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The Council of Europe has warned its 46 members that they need to crack down on digital asset money laundering.

Formed in the wake of World War II, the Council of Europe is an organization that’s committed to upholding human rights, democracy, and the rule of law in Europe. The organization has specialized committees that deal with specific issues under its mandate. This includes MONEYVAL, which focuses on anti-money laundering and curbing the financing of terrorism.

MONEYVAL’s report on AML measures

Last month, MONEYVAL issued a report in which the organization acknowledged that the emerging virtual assets sector is posing a significant challenge in relation to money laundering. This is because traditional gatekeepers have little control over the sector.

Although Chair of MONEYVAL Elżbieta Frankow-Jaśkiewicz acknowledged that European authorities have made great strides in monitoring this sector, she also said that rapidly-emerging subsectors such as decentralized finance (DeFi) have presented challenges that are proving difficult to overcome. 

One of the biggest impediments to enforcement of AML and CFT regulations is the cross-border nature of most digital asset entities and networks. Ms. Frankow-Jaśkiewicz noted that “supervisory cooperation in this field is at its very nascent stages, and is not yet keeping pace with the rapid evolution of technology”.

She went on to add that “it is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago, initially to transfer and conceal proceeds from drug trafficking. Nowadays, their methods are becoming ever more sophisticated, and larger in scale.”

Small and large digital asset projects are both involved in laundering

In the report, MONEYVAL reveals how digital assets are being used to launder proceeds from fraud and corruption. The organization adds that some smaller digital asset projects are being created for the sole purpose of laundering. Plus, many larger projects are also seeing heavy market manipulation. This, the organization believes, is a major predicate offense for money laundering.

As part of the report, Ms. Frankow-Jaśkiewicz pledged that MONEYVAL will continue to strengthen its working methods and priorities to help its members tackle digital asset money laundering more effectively. MONEYVAL has also partnered with many other agencies across Europe to enhance its ability to clamp down on digital asset money laundering.

Ensure compliance with Veriff

Here at Veriff, we understand that AML and KYC regulations are always changing. After all, as criminals and bad actors find new ways to exploit services, regulatory bodies must catch up as quickly as possible.

Thankfully, with our AML and KYC compliance solution, you can fight financial crime and show regulators that you take KYC regulation seriously. By verifying your customers, screening global sanctions and PEP (politically exposed persons) lists, and monitoring them on an ongoing basis, you can ensure that you achieve end-to-end anti-money laundering compliance.

To learn more about how we can help you, talk to us today.

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