FINMA Issues Warning About Money Laundering Risks Associated with Cryptocurrency
Switzerland’s Financial Market Supervisory Authority (FINMA) has issued a warning regarding the risks of money laundering associated with cryptocurrencies. In its 2024 Risk Monitor report, the regulatory body highlighted that cryptocurrencies, including stablecoins, are increasingly being used for cyberattacks, illegal dark web activities, and evading sanctions related to geopolitical conflicts.
Specifically, stablecoins have witnessed a significant increase in illicit transactions linked to sanction evasions, which further complicates efforts to combat money laundering. To address these risks, FINMA has outlined various measures, including onsite reviews, an overhaul of its audit program, and a focus on risk tolerance and management for entities with politically exposed customers or connections to high-risk areas.
Regarding digital assets, FINMA stated that it implements institution-specific measures to mitigate money laundering risks, employing targeted oversight to effectively address vulnerabilities. Earlier this year, the regulator published guidelines to address risks associated with stablecoins, mandating issuers to verify the identities of token holders and beneficial owners.
Furthermore, FINMA cautioned that financial intermediaries operating in the crypto sector without proper risk management measures could face legal consequences and reputational damage.
It is worth noting that concerns about cryptocurrencies and stablecoins are not limited to Switzerland. Globally, these digital assets and related businesses have attracted attention due to their potential links to money laundering and other illicit activities. As a result, there has been an increase in scrutiny and calls for enhanced oversight across jurisdictions.
In May, the U.K. Financial Conduct Authority identified crypto-asset firms as one of the sectors most vulnerable to money laundering in the coming years and implemented a rigorous registration process for crypto businesses to mitigate these risks. Platforms such as Binance and KuCoin have faced scrutiny over the years in connection with money laundering allegations.
Tether, the issuer of the world’s largest stablecoin USDT, has long been accused of facilitating money laundering and other illicit activities. Recently, the company faced renewed scrutiny after reports emerged of an investigation by the U.S. Department of Justice regarding potential violations of sanctions and anti-money laundering regulations. However, Tether has denied any wrongdoing, stating that it has not received any indication of an investigation.
In a separate development, Tether unveiled a statue honoring the legacy of the creator of Bitcoin, which is set to disappear over time, in Switzerland.
