Virtual Currencies, Crowdfunding and the Money Laundering and Terrorist Financing Risk

August 8 2017
In the financial crime space, cryptocurrency and crowdfunding are buzzwords du jour – yet what actually is known about the money laundering and terrorist financing risk associated with each? In January 2016, a Europol report concluded that the use of Bitcoin by terrorist organisations to finance their activities could not be confirmed.[1] Moreover, in March 2015 HM Treasury found, referring to a 2014 NCA assessment on the nature and scale of threat posed by virtual currencies, “little evidence to indicate use by established money laundering specialists or that digital currencies played a role in terrorist financing.”[2] More recently, on 4 July 2017, the European Commission released a supranational assessment of the risks of money laundering and terrorist financing for various financial and non-financial sector products.[3] The report assesses the threat level of traditional financial sector products such as payment services, life insurance, mortgages, business loans as well as virtual currencies and crowdfunding. Additionally, it considers the threat and vulnerability level of non-financial products such as high value goods. Interesting observations are made on the money laundering threat posed by virtual currencies, the best known of which is Bitcoin, as well as crowdfunding platforms.