Basel Institute Crypto-Related Crime


On Sep. 27, Basel Institute issued summary of panel discussion.


  • Basel Institute issued a summary following panel discussion at the 8th Global Conference on Criminal Finances and Cryptocurrencies on the vital role financial institutions play in preventing and detecting money laundering through crypto assets.
  • From perspective of banks and other financial institutions, how to address crypto-related financial crime risks and create regulatory policy without hindering innovation.
  • Follows Basel Institute Sep. 2024 wrote on cryptocurrencies and crime, see #226110.
  • Key Takeaways
  • The global economy faces the challenge of achieving payment transparency in cross-border payments: issue is particularly important from a regulatory policy perspective.
  • With right approach, cryptocurrencies can have a positive impact: serve as a tool for financial inclusion and innovation, providing greater access to financial services for individuals and groups who have previously been excluded from traditional banking.
  • Considering its inherent risk profile, crypto can also function as a catalyst for meaningful regulatory reforms worldwide; cryptocurrencies are linked to technological advances, such as immutable ledgers and publicly accessible blockchains.
  • Blockchain and related crypto analytical tools have been developed to make use of data recorded and to enable analysis and monitoring of cryptocurrency transactions.
  • Help financial institutions and other actors decipher complex data and manage risks.
  • With flows of money becoming more intertwined with emergence of cryptocurrencies, traditional financial institutions increasingly involved in managing crypto value flows.
  • Banks crucial for crypto on- and off-ramps, bridging fiat currencies and digital assets.
  • Blockchain as a Tool in AML/CFT
  • Crypto’s use of blockchain technologies can enhance efforts in AML/CFT.
  • Advanced tools can analyse transaction patterns, identify links between addresses, and be applied to techniques designed to enhance anonymity, obscure transaction details.
  • Blockchain technology can be used for information sharing: blockchain could facilitate secure collaboration between financial institutions, regulators and law enforcement.
  • Smart contracts can be used to automate compliance and enforce regulations directly on blockchain; real-time monitoring allows for quick detection of suspicious activity.
  • Regulatory Challenges
  • Despite advances, challenges persist in development and regulation of cryptocurrency:
  • Anonymity and pseudonymity: A significant challenge is balancing the right of individuals to privacy – one reason many users flock to crypto – with need to prevent money laundering or other forms of financial crime, for which identification is central.
  • Regulatory fragmentation: Another challenge is addressing fragmented and inconsistent regulations across jurisdictions, as well as uneven implementation.
  • As cryptocurrencies become more widely accepted, governments and relevant international bodies need to work together to develop consistent and standardised regulations applicable to the crypto ecosystem and to implement these effectively.
  • Decentralisation vs. centralisation: whereas centralised crypto asset service providers (where controlling entities and/or persons are easily identifiable) easier to regulate, more decentralised crypto exchanges/services pose challenges for regulatory oversight.

Regulators Basel Institute
Entity Types Corp
Reference PR, 9/27/2024
Functions AML; Compliance; Legal; Operations; Risk; Technology
Countries Global Regulator
Category Global Standards Body
State
Products Corporate; Cryptocurrency
Regions Global
Rule Type Guidance
Rule Date 9/27/2024
Effective Date 9/27/2024
Rule Id 227833
Linked to Rule :226110
Reg. Last Update 9/27/2024
Report Section International

Last substantive update on 10/01/2024