Posted by Brian Monroe - firstname.lastname@example.org 10/13/2021
ACFCS ‘Don’t Be Spooked by Crypto Workshop’ Takeaways: As crypto transactions soar into trillions of dollars, risks rise for bank AML oversight, more customers could be exchanges in disguise
By Brian Monroe
October 13, 2021
ACFCS this week capped its official two-day “Don’t Be Spooked by Crypto Workshop,” where top thought leaders in the public and private sectors offered critical insight on criminal trends, regulatory focal points and vulnerabilities that could victimize virtual exchanges and banks.
One high level theme that speakers highlighted is that the worlds of virtual value and brick-and-mortar banks are moving ever more closely together, with more than $4 trillion in crypto payments in a pandemic-pummeled 2020, a soaring financial throughput that took credit cards decades to eclipse.
With speculators, longtime individual and institutional investors – and even entire countries jumping whole hog into crypto because of the instability and inflation in their own fiat currencies – the nascent and volatile space is “growing like crazy,” said one speaker from blockchain analytics heavyweight, and event partner, CipherTrace.
As well, the touchpoints with the formal financial system are also expanding because regardless of the type of coin used – big names like Bitcoin, memecoins with a dog on them or privacy coins like Monera and Zcash – virtual value transactions broadly begin and end with banks.
Financial institutions are the on-road and off-road to roiling worlds of value tucked away on an immutable blockchain.
Banks also face regulatory wrath and real risks tied to oversight of customers engaging in the crypto space.
That was evidenced in a profound and public way with the January 2020 U.S. Treasury Office of the Comptroller of the Currency action against M.Y. Safra bank for lax anti-money laundering (AML) efforts for a host high-risk transactions tied to risky jurisdictions involving digital asset customers, including:
- Digital currency exchangers
- Digital currency ATM operators
- Crypto arbitrage trading accounts
- Blockchain developers
- Fiat-to-crypto money services businesses
What is crypto? Security, commodity or financial oddity?
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How to separate the crypto exchange wheat from the chaff? The five dimensions of risk
But with, in some cases, scammers literally coaching victims on how to buy crypto with their savings and even what addresses and exchanges to use, that begs the question: how does a bank or regulator parse out the risky exchanges – ones that might have lax AML programs or be tied to cyber-frauds – from the rest?
Are crypto exchanges just cyber-fraud funneling, virtual value villains?
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