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In their own words: "Leading global action against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction".
While probably well intentioned there seems to be an increasing emphasis on cryptocurrencies being inherently 'bad', a tool solely used for creating virtual safe havens for criminals and terrorists and their illicit financial dealings.
Yet, money laundering is certainly nothing new and and the term was first coined in 1920’s during prohibition in the United States. Organized criminals were making a lot of money from the illicit sale of booze and needed a way to explain their sudden new found wealth. A strategy was devised to conceal the huge profits and this took the form of purchasing laundromats. As a cash-only business laundromats were initially an excellent way to funnel the incredible revenue made from illegally selling alcohol to a thirsty population.
The U.S government eventually got wise to the scheme and after several attempts, in 1931 Al Capone was put behind bars for tax evasion (despite far more serious and violent crimes linked to his criminal organization).
As ever, criminal gangs eager to avoid the fate of Scarface were quick to grasp that money laundering would need to develop new and better strategies to evade the authorities. Front businesses became ever more varied and casinos soon joined the illegal fun.
Once again, the Swiss banking system comes to the rescue and it was one of Al Capone’s contemporaries known as Meyer Lansky who is widely acknowledged as laying the foundations for the international money laundering system.
He learnt to use banks to conceal illicit funds from prying government eyes. Money would be placed into a Swiss bank that could then transfer it to other banks anywhere in the world, magically making the funds legitimate in the process.
Lansky was a pioneer and this seemingly simple method has became increasingly sophisticated over time. This has been aided by an increasingly global world, where criminals operations are no longer limited to one country but span the world and property and money can cross borders in the blink of an eye. Money that had to be physically carried across borders in suitcases can now disappear with a mere click.
The G7 are now meeting again and the world has undeniably changed dramatically in the last decades. One of the top priorities for the FATF (Financial Action Task Force) is now cryptocurrencies and many institutions and leading figures have been quick to blame crypto for money laundering or favouring criminal activities. Yet as history reveals, money laundering is nothing new, and crypto is merely another tool that has been adopted as systems change over time. Technology is not inherently criminal or good, it is a tool. You may as well ban kitchen knives due to being used for stabbings or cars because criminals employ getaway vehicles to flee crime scenes!
Australia has been one of the first countries to take a stance on this new digital realm, by introducing new money laundering laws. The Australian Taxation Office, (ATO) can now tax the profits of cryptocurrencies and identify previously anonymous investors. Other countries are soon following suit and implementing the recent regulatory standards published by the FATF.
Chief among these changes would be making it easier to identify parties to crypto transactions in the attempt to mitigate money laundering and terrorist financing risks. The group is preparing for the future and trying to keep up with the fast pace of technological change. The FATF is keen for all countries to adopt their measures (and soon) so future developments will not create loopholes that terrorists and criminals can exploit.
Personally, it is important that crypto is not curtailed and regulated out of existence. Many institutions and power structures feel threatened by digital currencies and their transformative power. Being blamed or seen as the reason illicit activities are carried out would be incredibly counterproductive (and hypocritical) as there is so much potential to create positive change in the world.
FATF focus on virtual assets
https://www.fatf-gafi.org/
