🌎 Switzerland Warns of Crypto Money Laundering Risks

Swiss Regulator Warns of Money Laundering Risks in Cryptocurrencies

The Financial Market Supervisory Authority (FINMA) of Switzerland has issued a warning regarding the risks of money laundering associated with cryptocurrencies, including stablecoins. According to its 2024 Risk Monitor report, these digital assets are increasingly being used for cyberattacks, payments for illegal dark web activities, and evading sanctions linked to geopolitical conflicts.

Rise in Illicit Transactions

Particularly concerning is the “big rise” in illicit transactions related to sanction evasions using stablecoins, which further complicates anti-money laundering efforts. To combat these risks, FINMA has outlined its broader efforts, including onsite reviews, an overhaul of its audit program, and a focus on risk tolerance and management for entities with politically exposed customers or links to high-risk areas.

Targeted Oversight and Regulation

In relation to digital assets, FINMA stated that it “takes institution-specific measures to mitigate the money laundering risk,” applying targeted oversight to address vulnerabilities effectively. Earlier this year, the regulator published guidelines to address risks associated with stablecoins, which require issuers to verify the identities of token holders and beneficial owners.

FINMA has also cautioned that financial intermediaries operating in the crypto sector without proper risk management measures could face legal consequences and damage to their reputations. Key tips for crypto businesses to mitigate these risks include:

Implementing effective risk management measures
Verifying the identities of token holders and beneficial owners
Conducting regular onsite reviews and audits
Focusing on risk tolerance and management for high-risk entities

Global Regulatory Concerns

Regulatory concerns about cryptocurrencies and stablecoins are not confined to Switzerland. Globally, these digital assets have been flagged for their potential links to money laundering and other illicit activities, prompting increased scrutiny and calls for enhanced oversight across jurisdictions.

In May, the U.K. Financial Conduct Authority identified crypto-asset firms as among the sectors most vulnerable to money laundering in 2022-23. As such, the regulator has implemented a rigorous registration process for crypto businesses to counter these risks.