key money laundering and terrorist financing risks for the UK
“…Digital currencies
5.7 …The vulnerabilities identified in the 2015 NRA were largely around the anonymity and cross-border exposure of digital currencies, as well as the lack of interaction with the regulated sector…
5.8 The NCA has assessed the risk of digital currency use for money laundering to be relatively low; although NCA deems it likely that digital currencies are being used to launder low amounts at high volume, there is little evidence of them being used to launder large amounts of money.
5.9 By contrast, from a cyber crime perspective, the threat posed by digital currencies is higher, owing to their role in directly enabling cyber-dependent crime. This is evident in three areas: firstly, digital currencies directly facilitate victim payments to cyber criminals. (…) Secondly, digital currencies aid the growth of cyber crime-as-a-service. (…) Thirdly, digital currencies play a vital role in laundering the proceeds of cyberdependent crime, directly facilitating cyber criminal financial flows.
5.10 (…)t the suspicion was raised because of the involvement of digital currencies, rather than any suspicion of money laundering or terrorist financing. The reporting and detection of suspicious activity is likely to increase when exchanges and custodian wallet providers become regulated through the EU Fifth AntiMoney Laundering Directive (5MLD), as outlined below.
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Terrorist financing
5.12 … The use of digital currencies to buy and sell illicit goods more widely may mean that digital currencies may be used in order to purchase items which could be used in an act of terror (such as firearms) or used to fund an act of terror (such as stolen card details), but there is no evidence of this occurring to date in the UK. Terrorist use of digital currencies is assessed to be unlikely to increase significantly in the next five years.
(…)
5.15 The UK therefore supports the intention behind bringing
digital currency exchange firms and custodian wallet providers into AML/CTF regulation as part of 5MLD [EU Fifth Anti-Money Laundering Directive], in line with the risk-based approach that FATF standards require….”
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