People subject to sanctions are reportedly using cryptocurrency services to evade the sanctions, and this could put crypto firms and those transacting in crypto at risk of fines or criminal prosecution.
This should serve as a “red flag” for firms to implement proper due diligence and effective monitoring, according to a press release issued Thursday (Aug. 25) by anti-money laundering (AML) software provider SmartSearch regarding a red alert update issued by the Joint Money Laundering Intelligence Taskforce (JMLIT), a partnership between United Kingdom law enforcement agencies and the financial sector.
“As [designated persons] continue to take advantage of the growing crypto network to transfer assets, businesses across the sector are leaving themselves heavily exposed to potential money laundering,” SmartSearch Managing Director Martin Cheek said in the release.
The alert from JMLIT reported that designated persons (DPs) are using crypto services, associates and close contacts to evade sanctions, move “significant sums” of money and protect their personal or commercial holdings, per the press release issued by SmartSearch.
The alert was issued after the U.K.’s National Crime Agency arrested 10 people suspected of helping DPs evade sanctions, according to the release.
“Regulators have made it clear that something has to be done, and with the risk of fines and sentences, reputational damage and the threat of time lost to far-reaching investigations, I’m sure firms across the sector will agree too,” Cheek said in the release.
As PYMNTS reported earlier this month, AML regulations require crypto exchanges and other virtual asset service providers (VASPs) — and all regular financial institutions (FIs) — to monitor and record transactions above a certain amount, and report them and any suspicious activities to authorities, including the Financial Crime Enforcement Network (FinCEN) in the United States.
Together with AML, other regulations around cryptocurrency to be mindful of include countering the funding of terror (CFT) and know your customer (KYC).
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