Global AML Watchdog Turns Attention to Bitcoin

July 10, 2014

Global AML Watchdog Turns Attention to Bitcoin An international group focused on combating money laundering has released a document defining the virtual currency space and exploring the AML risks cryptocurrencies like Bitcoin and others pose. The Financial Action Task Force—an intergovernmental body comprising representatives from 34 countries, the European Commission and the Gulf Cooperation Council—recently offered a comprehensive set of definitions regarding virtual currencies and outlining the threats and opportunities inherent in the new technologies.

While the FATF’s purview is assessing payment technologies vis-à-vis their impact on money laundering and financing terrorism, the document does not take a negative stance on Bitcoin or other cryptocurrencies, exploring the benefits in addition to the risks.

“Virtual currency has the potential to improve payment efficiency and reduce transaction costs for payments and fund transfers,” the authors wrote. “For example, Bitcoin functions as a global currency that can avoid exchange fees, is currently processed with lower fees/charges than traditional credit and debit cards, and may potentially provide benefit to existing online payment systems, like PayPal. Virtual currency may also facilitate micropayments, allowing businesses to monetize very low-cost goods or services sold on the Internet, such as one-time game or music downloads.”

The document did, however, neatly encapsulate the anonymity inherent in cryptocurrencies and detailed some of the more well-known law-enforcement efforts against Silk Road, Liberty Reserve and Western Express International.