Cryptocurrency exchanges in the United Kingdom are unlikely to be financing terrorist activities or laundering money, according to a report by Financial Action Task Force (FATF).
“[Virtual currency exchange] is an emerging risk, and there is not yet evidence to suggest broadscale money laundering or terrorist financing,” the FATF explained.
The finding confirms what crypto fans have been saying for years, and busts the most enduring myth surrounding cryptocurrencies.
Still, the report lists a number of recommendations for UK regulators. “Continue to develop an understanding of emerging risks (such as virtual currencies) and take appropriate action,” the FATF counselled.
Publication of the report comes as a major financial institution, Deutsche Bank, is found guilty of money laundering activities. And in October, a similar scandal was revealed at Danske Bank where more than $227 billion was laundered between 2007 and 2015.
The irony here has many crypto commentators frustrated – and for good reason.
Anyone notice that Deutsche Bank calls #Bitcoin a ponzi and EVIL criminal coin and then they get raided today by German police for money laundering allegations ! 😊😊 ummmm Great job Deutsche!!
— Łitecoin Bull (@litecoin_bull) December 2, 2018
The United Kingdom is paving the way for cryptocurrency recognition worldwide – and reports like these are proof of this.
So while UK financial regulators aren’t necessarily greenlighting immediate crypto adoption, they aren’t condemning it either.
This adds credibility to the stance of pro-cryptocurrency politicians in the UK, such as member of parliament Eddie Hughes. He advocates for taxation by bitcoin – giving citizens the option to pay their taxes with a few swipes in their hot wallets.
This is in stark contrast to countries like the United States, where Senator Chuck Schumer lambasted cryptocurrencies and called them “an online form of money laundering” at a 2011 press conference.
Senator Joe Manchin echoed these sentiments in 2014, when he called Bitcoin “unstable” and described its “notoriety” in a letter to congress. He suggested banning the currency altogether.
“[Virtual currency exchange] is an emerging risk, and there is not yet evidence to suggest broadscale money laundering or terrorist financing.” – October 2018 report, FATF
The FATF report directly contradicts the senators’ claims, and will hopefully lay the groundwork for constructive and co-operative conversation between cryptocurrency exchanges and regulators – in the United Kingdom, at least.
From Low Risk to No Risk
The next step will be to keep the risk of money laundering as low as possible.
As the recent Deutsche Bank and Danske Bank scandals illustrate, just because a regulation exists doesn’t guarantee people will follow it.
But cryptocurrencies can combat illegal activities in a way traditional banks cannot. The blockchain technology behind cryptocurrencies tracks transactions and delivers an unprecedented degree of accountability for people, banks and governments.
Makes it a lot harder for bank executives to disappear $790 million worth of shares like Deutsche Bank and CitiGroup did in 2015, doesn’t it?
Doing my taxes drives home how trackable crypto is and how the narrative is wrong.
Criminals should HATE Bitcoin & governments should LOVE Bitcoin.
They can practically eradicate money laundering & tax evasion.
They'll have to give up the inflation tax though. 🙂
— Kevin ''RIP Tim May'' Pham (@_Kevin_Pham) November 11, 2018
The potential of cryptocurrencies to combat, and enable, money laundering featured prominently in G20 discussions last week.
“We will continue to monitor and, if necessary, tackle emerging risks and vulnerabilities in the financial system. […] We look forward to continued progress on achieving resilient non-bank financial intermediation,” announced a communique published by G20 participants last Sunday.
A global about-face is underway, as financial institutions and governments are confronted with the rise of cryptocurrencies. So far, UK regulators are leading the way – but this is crypto, and anything can happen.
For updates as the story develops, follow Bitcoin UK on Twitter and Facebook.
Liz is a Canadian journalism student and content producer at Bitcoin UK. Connect with her on twitter at https://twitter.com/Elizabeth_Utley