“It is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago,” Moneyval Chair Elżbieta Frankow-Jaśkiewicz said in a foreword to the report. “Methods are becoming ever more sophisticated, and larger in scale,” extending from drug trafficking into areas such as fraud, corruption and tax evasion.
The expert committee joined standard-setters like the Financial Action Task Force (FATF) in calling for a tougher approach to virtual assets. Jurisdictions, such as the European Union, are already in the course of implementing controversial FATF rules to identify crypto users and enable funds to be traced, which some in the industry have warned could harm privacy and innovation.
The rapidly evolving technology, which often spreads across multiple jurisdictions, poses a challenge for regulators, the report said, calling for enhanced regulation and supervision and better coordination among national agencies. A study due later this year will examine cryptocurrency laundering trends, it said.
“There is suspicion that some of the smaller cryptocurrencies are being set up specifically with the motive of laundering,” Frankow-Jaśkiewicz said. In addition, “the larger virtual assets are seeing heavy market manipulation, which is a major predicate offense for money laundering.”
Moneyval supervises the typically smaller European territories that are not overseen by Paris-based FATF, including fintech hubs such as Malta, Gibraltar and Estonia.
Though a monitoring body, its peer reviews of and recommendations to individual jurisdictions can influence national legislative reforms.
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