ComplyAdvantage has released the Anti-Money Laundering Guide for Crypto Firms to help firms better understand the risks.
The cryptocurrency market was worth $1.5bn at the end of 2021 and is expected to hu $2.3bn by 2028, research from Vantage Market Research claims. However, as this demand increases, there are fears around money laundering and how crypto firms will fare with new regulations.
In its report, ComplyAdvantage has outlined some of the risks crypto firms will face for failing to meet AML compliance.
One risk is facilitating sanctions evasion. This is a key risk when dealing with decentralised exchanges and decentralised finance platforms. It states that bitcoin has been used to evade sanctions to Iran.
Another risk is enabling terrorist financing. ComplyAdvantage states that governments in geopolitically sensitive climates have argued the this is the biggest financial crime risk related to crypto. As a result, ComplyAdvantage warns firms to expect more stringent terrorist financing measures.
Finally, ComplyAdvantage stated criminals may seek to convert illicit fiat currency into crypto to disguise its origins. It references a recent case from the Financial Action Task Force in which criminals stole KRW 400 million from victims in South Korea through phishing and transferred funds into a foreign crypto wallet.
ComplyAdvantage founder and CEO Charles Delingpole said, “We’ve seen a huge uptick in new crypto services across our industry and within our own customer network which is extremely exciting. However, this dynamic growth has triggered increased regulatory scrutiny which crypto companies need to stay ahead of.
“As such, our team will continue to develop helpful resources including this guide and others such as our State of Financial Crimes 2022 Report or Evolving Use of Sanctions 2022 Guide to help guide growing financial firms through the global complexities of anti-money laundering regulations.”
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