European Watchdog MONEYVAL has published a report that warns of the dangers of decentralised finance and privacy coins, urging European states to crack down on cryptocurrency-based money laundering.
The report, published on Wednesday by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) called for stricter regulation of cryptocurrencies, as well as “specialised gatekeeper positions” such as lawyers and accountants, in order to combat money laundering.
Elżbieta Frankow-Jaśkiewicz, Chair of MONEVYAL, noted:
“The Pandora papers scandal in 2021 demonstrates the growing scale of the money laundering threat and the persistence of launderers in abusing the international financial system to hide their illicit proceeds. We are facing a combination of well-known money laundering methods and newer trends requiring robust action and coordination from governments in Europe and around the world”.
The Pandora papers was a leak of over 12 million documents that incriminated global politicians and wealthy elite for tax evasion and corruption, with specialised professionals or “gatekeepers” facilitating this tax evasion. MONEYVAL has concluded that the nascent digital assets sector is another significant challenge to combat money laundering.
“There is suspicion that some of the smaller cryptocurrencies are being set up specifically with the motive of laundering […] the larger virtual assets are seeing heavy market manipulation, which is a major predicate offense for money laundering.”
Frankow-Jaśkiewicz added:
“A newer money laundering trend is related to the emerging virtual assets sector, the increasing global use of cryptocurrencies, and other components of the rapidly evolving ecosystem of so-called “decentralized finance” (DeFi).”
The annual supervision report stated that out of the 22 European jurisdictions evaluated by MONEYVAL, 18 have insufficient levels of compliance.
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