Cryptocurrencies: money laundering and terrorist financing risks have increased
28.02.2024
Over the past decade, cryptocurrencies – or virtual assets – have emerged as a mass phenomenon with major implications for the financial system. Increasingly, cryptocurrencies are also being misused for illicit purposes. A Swiss authorities working group has recently published a report presenting the latest findings as well as possible countermeasures.
In Switzerland, a growing number of financial intermediaries provide virtual assets services. This has led to a blurring of distinctions between the traditional financial sector and the digital sector as virtual assets become a more integral part of traditional payment platforms. Criminals have recognised the potential of this technology and are now using cryptocurrencies in a wide range of illicit activities, from theft and fraud to the most serious forms of transnational crime, including money laundering and terrorist financing. Among other things, the Swiss authorities working group (CGMF) concludes that the risks of money laundering and terrorist financing have greatly increased as a result of the growing popularity of virtual assets.
Rising volume of suspicious activity reports and greater loss amounts
In recent years, financial intermediaries in Switzerland have observed a surge in transactions potentially linked to money laundering and terrorist financing. This has led to a sharp increase in the volume of virtual assets-related suspicious activity reports (SARs) submitted to Fedpol's Money Laundering Reporting Office Switzerland (MROS). In 2022, nearly 14% of all incoming SARs related to virtual assets. The loss amounts resulting from vitual assets-related crime have also risen dramatically, reaching double-digit million levels in Switzerland in 2022.
Proposed action steps to mitigate risk
The report identifies the risks for Switzerland and proposes a series of action steps to minimise these risks and effectively combat money laundering and terrorist financing. These include filling data and knowledge gaps on the virtual asset sector and proactively encouraging financial intermediaries with virtual assets activities to more readily report suspicious activity. Moreover, all stakeholders involved in the fight against money laundering and terrorist financing must allocate sufficient capacity and resources for this purpose. The report also encourages Switzerland to further intensify international cooperation as a key step towards successfully countering the misuse of virtual assets.
Read the full report: National Risk Assessment (NRA) - Risk of money laundering and the financing of terrorism through crypto assets (admin.ch)