In a report, the Federal Reserve of the United States suggests on the possibility of money laundering with the use of cryptocurrencies
In 2018, Lael Brainard, member of the Board of Governors of the Federal Reserve System (Fed), explained that there is no need for a cryptocurrency of the Fed or any central bank, as this could be equivalent to providing ready means for money laundering. Forbes magazine reports that this statement was made in response to proposals to issue cryptocurrencies directly by central banks. The purpose of this is to generate more stable and reliable currencies than those produced in the private sector, with Bitcoin being the best example of these.
Leer en español: ¡Cuidado! Con las criptomonedas también se puede lavar dinero
Brainard's claims are evidence of a concern on the part of the Fed regarding the possibility of money laundering through cryptocurrencies, which are gaining popularity. Therefore, it is worth asking what fundamentals the Fed can have to have this concern.
The first point that must be taken into account is the fact that cryptocurrencies do not enjoy a clear legal status in all countries of the world. According to CNBC in 2017, countries such as Japan and Russia have carried out processes for the legalization of Bitcoin as a valid payment method in their territories. However, a report from the Law Library of the United States Congress of 2018 indicates that countries such as Algeria, Bolivia, Egypt, Iraq, Morocco, Nepal, Pakistan and the United Arab Emirates have explicitly prohibited the use of cryptocurrencies.
For their part, countries such as China, Colombia, Dominican Republic, Indonesia, Iran, Saudi Arabia and Taiwan, among others, have laws that implicitly prohibit the use of cryptocurrencies. According to Andrew Norry of Blockonomy, a journal specializing in the economy of cryptocurrencies, the increase in the value of Bitcoin in recent years has generated a sense of urgency to regulate the use of this type of alternative currencies.
This urgency is evident even in a 2012 FBI report. This agency warns that the increase in popularity of Bitcoin, together with the lack of a centralized authority dedicated to the flow of this cryptocurrency, makes this an attractive medium for people looking to launder money and perform other types of criminal activities using the Internet as a means to the global transfer of money, because the current situation makes it difficult to detect suspicious activity.
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A phenomenon that is already happening
Currently, cases of money laundering have been reported through the use of cryptocurrencies. According to a 2018 Business Insider report, Rob Wainwright, director of the European Police Office (Europol), said that 4% of the total illegal money circulating in Europe is channeled through cryptocurrencies such as Bitcoin. This corresponds, explains Europol, to about US $ 5.5 million.
In an interview with the BBC, Wainwright issued a warning similar to that of the FBI: "[The cryptocurrencies] are not banks and governed by a central authority so the police cannot monitor those transactions. And if they do identify them as criminal they have no way to freeze the assets unlike in the regular banking system."
El Espectador reported this year that 23 people were captured by dismantling two money laundering networks, 21 of them in Spain and two in Colombia. According to the Specialized Directorate Against Money Laundering, about US $ 2.9 million had been laundered, partly through the purchase and sale of cryptocurrencies such as Bitcoin and Altcoin.
If the money laundering reports show anything about the use of cryptocurrencies, it is perhaps that the most reasonable thing to do is to follow the warnings of the FBI and Europol and to point to a central authority focused on the regulation of the circulation of cryptocurrencies.
LatinAmerican Post | Juan Diego Bogotá
Translated from "¡Mucho ojo! Con las criptomonedas también se puede lavar dinero"