The director of the United States Financial Crimes Enforcement Network, Kenneth Blanco, has recently issued a warning for worldwide banks concerning their cryptocurrency risk exposure. He talked about this subject during this week’s virtual 2020 ACAMS anti-money laundering Conference which took place in Las Vegas. He also mentioned the obligations that banks have to implement efficient policies that act against money laundering activities.
According to the ongoing FinCEN regulations, all financial institutions need to take the responsibility to find and report any potentially-suspicious activity concerning the ability of criminals to use card verification checks for money laundering purposes, evasion, and other illegal activities concerning finances. It’s definitely interesting that most banks are still unsure how and if virtual currencies affect their efforts.
The FinCEN director also said that banks worldwide definitely need to carefully-inspect their anti-money laundering regulations and procedures, especially when it comes to crypto. Not doing this will prove damaging for these institutions as examiners will most likely determine whether or not the banks have made efforts to protect themselves against illegal activities.
Moreover, Blanco mentioned that exchanges are not the only ones to have a high crypto risk exposure. Money services businesses are definitely not the only ones exposed to such dangers. Crypto exposure must be one of the most important topics for all banks, especially during these trying times. Both FinCEN and the examiners will ask about these issues when analyzing how effective or not the anti-money laundering programs are.
Regarding this issue, the crypto analytics firm CipherTrace Labs conducted a research last year which came to the conclusion that eight out of the ten major United States banks had certain links to illegal cryptocurrency service businesses. These entities accept real money payments in exchange for digital currencies which results in basically running as unregistered P2P exchanges.
The problem extends even further because most such entities do not even have anti-money laundering procedures or even know-your-customer programs. This means that banks as well as other financial institutions are very exposed to money laundering.
This is not the first time that worldwide banks have dealt with criticism concerning their anti-money laundering and know-your-customer programs. According to a report by the International Consortium of Investigative Journalists, banks have identified over $2 trillion processed transactions which have been deemed suspicious and should be frozen. When it comes to the suspicious money that banks have yet to discover or report, the amount could be a lot larger.