Call for Stricter AML Regulations for Cryptocurrencies

Under Secretary for Terrorism and Financial Intelligence for the US Treasury, Sigal Mandelker has voiced the need for stricter regulations regarding cryptocurrencies such as Bitcoin.  While on tour in Asia, Mandelker spoke to reporters and stressed the importance for regulating cryptocurrency due to its increasing popularity, and praised Japan and Australia for already doing so.

As the largest market for Bitcoin trading, Japan is the only country to utilize a licensing system for cryptocurrencies.  The push for Japan to first regulate cryptocurrency came after Mt. Gox, a large Bitcoin trading platform was forced to file for bankruptcy protection after millions worth of Bitcoin disappeared.  South Korea is also working on regulating the trade of cryptocurrencies, and is now requiring banks to identify investors and the source of their funds, and have eliminated the option of using anonymous accounts for such transactions.  The US has regulated this type of currency since 2013, and has implemented certain requirements such as “money transmitters” which are traders and administrators of cryptocurrencies who must have enough authority in order to prevent the currency from being laundered.

The EU has also been taking the proper steps in regulating cryptocurrencies and creating new regulations such as the new law in Poland that was drafted for the purpose of cryptocurrency regulation which focuses on anti-money laundering (AML) regulation and the prevention of tax evasion.  This law plans on bringing cryptocurrencies under the same regulations as AML and counter-terrorism funding.  Not all entities affected by this new law deal with cryptocurrencies, but those that do are required to perform proper customer due diligence and report any suspicious transactions.  The government also mandated that all cryptocurrency firms be monitored by officials in order to prevent money laundering.

While Japan, the US, and the EU have regulations in place for cryptocurrency, Mandelker believes that similar regulations need to take place in other countries as well because cryptocurrency linked to money laundering is considered a high focus for the US Treasury Department.  This topic will be further discussed at a meeting of 20 industrial economies to take place sometime between November and December of this year.


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