The role of cryptocurrency in money laundering

Written by Davies on / Reading time: 4 minutes.

The role of cryptocurrency in money laundering

To talk about money-laundering capital seems to carry a negative and illegal feeling with it. Of course it is, but the reality is that it exists. However, did you ever wonder why some central banks are determined to qualify cryptocurrencies as a facilitator of such actions? Why they relate money laundering with virtual currencies? Why you shouldn't question cryptocurrencies by its use in money-laundering?

Look at the facts. Banks as the Bank of Spain have warned of the fraud which could result in the cryptocurrencies because of their anonymity. They describe this system of unregulated cross-border space and high risk of loss of the invested capital. However, we do not want to continue talking about what you already know. We want to make a pause in this subject, as well as a proposal: why don’t you take risks to confront them and make cryptocurrencies a safe system?

Take the threat and turn it into an opportunity!

Cryptocurrencies and security

It is possible that some cyber-criminals have made use of digital currencies to money laundering to make their crimes real. We know that this may be a threat and therefore professionals in this new world are working to make the cryptocurrencies system more secure and effective. Year after year, we all are seeing emerge new cryptocurrencies and how their creators are working its security and privacy bases.

Blockchain technology has something important to say in this regard, and its system of blocks, together with cryptography and distributed consensus network make privacy and security to not go by unnoticed. Cryptocurrencies based on blockchain provide transparency and the necessary confidence to perform transactions with the added peace of mind.

The participants of these systems should confirm the accuracy of transactions, that is why it results undeniable to ensure their safety. We talk about a consensus that lives in the walls of the mining. What do they ensure to cryptocurrencies in this sense? For example, they prevent a previous block to be modified or cancelled.

Where are you willing to go?

Why we should not accuse cryptocurrencies?

Long ago, we realized that, in the most difficult life things, metaphors can be the best way to understand them. So, in this post I want to make use of them. In general, we are talking about the relationship between cryptocurrencies and money laundering. However, it is important to not accuse this system, therefore, as a metaphor, knives have also been used to attack and murder people. However, that does not lead to not using them.

In the cryptocurrencies world something like that occurs, and it has not been the only medium used to perform illicit actions. Are you aware of the amount of dollars that are used to pay for nuclear weapons? Have many people stop using them for this fact? Maybe it is not about focusing on the negative aspects but rather on the positive, on all those aspects in which we can use cryptocurrencies to make a better financial system world.

According to the cryptocurrency system, we must take into account its pseudo-anonymous appearance. Thanks to it, it is possible to trace the money, although it is not known who he is the proprietary of it.

Why central Banks relates cryptocurrencies to money laundering?

Since virtual currencies began to take their first steps, we have heard of criminals who use them for money laundering. We have heard the background voice of central banks screaming about their dangers. But today, we make ourselves a question: what risks are really behind cryptocurrencies?

  • Their anonymity.
  • The difficulty to track their movements.
  • The lack of control.

As a result of such actions, some measures have emerged. Without going any further, to face numerous operations against drug trafficking, police have warned about the disturbing increased use of the crypto-laundering and has called for regulation of the virtual currency. After the dangers that seem to lead cryptocurrency about money laundering, the European Parliament proposed closer regulation for virtual currencies, like Bitcoin, to prevent them being used for money laundering and terrorism financing.

What is the aim of these measures? In short, it is fighting anonymity in the cryptocurrency market any action for money-laundering and the financing of terrorism.

A conclusion

Maybe it is still much to be done to put an end to such actions. Virtual currencies do not defend their use for illegal actions, so this type of systems professional work to combat it. The problem is the solution, and they have that very clear. They work on their transparency with the rest of the world not only to prevent fraudulent acts, but also to be able to track them when they occur.

Cryptocurrencies advance to guarantee their safety. We are still working and we continue to grow.

Together we can achieve it.