Expert: The risks of using bitcoin to launder money and terrorism are overestimated

347,000 reports on suspicious activity related to money laundering were received by the National Police of Japan. Of these, only 669 (0.19% of the total) concerned the use of cryptocurrencies.

This figure is almost no different from the global study of the Foundation for Defense of Democracies (FDD), Center on Sanction and Illicit Finance (CSIF), which showed that from 2013 to 2016 less than 1% of all bitcoin transaction were related to illegal activities. For three years, this percentage has decreased from 1.07 to 0.61, which demonstrates negative dynamics of the use of cryptocurrencies for criminal purposes in the total number of transactions.

Despite the above numbers, the crypto community continues to observe the statements of regulators in which the latter “linen” cryptocurrency, accusing it of conspiracy with terrorism, drugs and weapons.

This position at the January meeting in Basel (Switzerland) was jointly defended by Interpol and Europol. In the United States, the House of Representatives invited Congress to consider a separate law on countering the laundering of funds by using cryptocurrencies. And Fincen (the financial intelligence body under the US Treasury) back in 2013 in its explanation determined that the cryptocurrency business is subject to financial monitoring.

To the question of why the risks of laundering of criminal income using cryptocurrencies are reassessed, the senior lawyer of JSC Yuskutum Nestor Dubnevich tried to answer.

one. The ratio of the money mass in the cryptocurrency with the part of it, which is used to launder funds, is insignificant

Europol, summarizing the above meeting in Switzerland, indicated that approximately 2-3 billion euros were washed through cryptocurrencies for their entire existence. Considering that today the capitalization of the virtual currency market ranges from $ 500 billion, the “frightening” figure of the European law enforcement officer is only 0.6% of its fiat equivalent.

And if we consider it in the context of the entire amount of “dirty cash”, which in road bags, lining of cars and tubes of toothpaste crosses the border, and the volume of which, according to various estimates, exceeded 2 trillion, then the share of bitcoin in it will be 0.15% (this 60 times less than the number of defective cars of Toyota, the release of which creates a risk of emergency situations, and, accordingly, a threat to life).

2. The absence of normal communication channels, as well as low computer literacy prevents the massive use of cryptocurrency in financing terrorism

Referring to the study of the above-mentioned fund, approximately 90% of all illegal bitcoin transactions passed through sites such as Silk Road, Agora, Alphabay-the largest “black” online markets. Most transactions on the above services concerned the purchase of narcotic drugs. It is known that financing of large terrorist groups occurs at the level of states, and bitcoin to such entities that use oil, supplies of weapons and other resources for financing purposes are not very interesting. This thesis expanded the Center of a New American Security in its study, pointing out additional factors such as poor Internet connection and misunderstanding of virtual currency technology, which also prevent their use to finance terrorism. According to the results of the analysis, the center came to the conclusion that cryptocurrency terrorists are more interested in the light of its increase in its price, and not the anonymity of transactions.

From the said above, disappointing conclusions are suggested that, for example, the majority of Ukrainian criminal cases related to the translations of cryptocurrencies to criminals of the DPR and LPR are the results of a well-played scenario of law enforcement officers, the purpose of which is to obtain the sanction of the investigative judge for a visit to the owner of a crypto-center or mining center. And the statement of the National Security and Defense Council of Ukraine from 11.01.2018, which indicates the risks of using cryptocurrencies to finance terrorism in the east of Ukraine – nothing more than guesses that are not supported by statistics, and therefore do not withstand any criticism.

3. In connection with the uncertainty of the legal status of cryptocurrencies, there are difficulties in their legal qualifications as a means for laundering income

The theory of financial monitoring determines the three stages of money laundering:

1) the introduction of illegally received income into legal structures of the economy (for example, the money received by the mafia from the sale of cocaine is entered into a non -profit fund for the development of urban initiatives);

2) building additional transactions, the purpose of which is to confuse the original source of the origin of funds (money from the non -profit fund is provided as a loan, used for lending and other return transactions);

3) the integration of illegal profit into a commercial sphere, where the criminals at the exit receive “clean” income (using money from a non -profit fund to pay for companies that are indirectly owned by a criminal environment).

At the same time, the lack of unified legal status of cryptocurrency (money, goods, investment asset) makes it difficult to qualify for its use at each individual stage of laundering.

According to Sergey Mokhnev, an adviser on regulatory issues of the CEX exchange.IO, the use of cryptocurrencies can play both on the hands of those who wish to wash dirty money or finance the terrorist act, and against them. At the same time, the possibility of successful use is caused by the reluctance of traditional financial institutions to delve into the nuances and features of blockchain technology, which, in essence, gives almost unlimited possibilities for tracking transactions within the network itself. And the possibility of such tracking is of great value both for AML divisions of financial institutions and for financial monitoring and law enforcement agencies.

It is worth noting that the group of financial measures to combat money was laundering (Fatf) in 2015 issued a guide to a risk-oriented approach to cryptocurrencies. This document describes possible measures, the application of which will allow participants in the cryptocurrency market to effectively manage the risks associated with cryptocurrency operations.

conclusions

It is not surprising that the first users of cryptocurrencies were Internet condenses who threw a shadow to a technology, designed to change the far from ideal traditional financial system. But we remember that criminals of the Wild West were the first to use the railway to transport gold mining of African American slaves. And high-speed Internet modems were one of the first to sell the largest porn sites. Young technology should survive this childhood disease before it matures for mass implementation.

For Eastern European countries, support for new technologies is a big chance to make a qualitative leap and attract new capital. The effectiveness of a well -thought -out approach last year was shown by Japan, which increased the country’s GDP by favorable regulation of cryptocurrencies by 0.3%. A number of small states such as Malta, Singapore and Gibraltar also understand the potential of decentralized technologies, actively working on bills to attract innovations in their jurisdiction.

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