[{"data":1,"prerenderedAt":171},["ShallowReactive",2],{"author-309":3,"author-team-309":7,"author-work-309":8},{"id":4,"name":5,"image":6},309,"Federico Paesano","c9086d7f-659f-4bf6-a741-7b480e5260be",null,{"publications":9,"news":126},[10,35,96,111],{"id":11,"title":12,"slug":13,"image":14,"type":15,"date_published":17,"publisher":18,"summary":7,"body":19,"area":7,"programme":7,"languages":20,"countries":25,"tags":26},1906,"Quick Guide 1: Cryptocurrencies and money laundering investigations","quick-guide-1-cryptocurrencies-and-money-laundering-investigations","c8a3a020-e64c-4d46-920b-a7ef4578eef2",[16],"Quick Guide","2023-08-23","Basel Institute on Governance","This quick guide to cryptocurrencies and money laundering investigations addresses the use of cryptocurrencies such as Bitcoin or Monero to facilitate serious crimes or to launder stolen money. It was originally published in March 2019 and updated in August 2021.\n\nIt explores, in brief:\n\n\n- What kind of crimes involve cryptocurrencies?\n- How do you \"follow\" virtual money?\n- What are the challenges in recovering stolen assets held in cryptocurrencies?\n- What more can law enforcement do to enhance their ability to investigate and prosecute cryptocurrency-related crimes?\n\n\nThe author, Senior Investigation Specialist Federico Paesano, leads the Basel Institute's \u003Ca href=\"https://baselgovernance.org/courses-and-events/cryptocurrencies-and-anti-money-laundering-training\">Cryptocurrencies and AML Compliance Training\u003C/a>. The four-session course is delivered virtually and is open to anyone seeking to prevent, detect and investigate the use of virtual assets for illicit activities, including both law enforcement and private-sector professionals.\n\nThe guide draws on recommendations of the \u003Ca href=\"https://baselgovernance.org/5CrC\">Global Conference on Criminal Finances and Cryptocurrencies\u003C/a>, co-hosted annually by the Basel Institute on Governance, Europol and INTERPOL.\n\n### About this Quick Guide\n\nThis work is licensed under a \u003Ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License\u003C/a>. It is part of the Basel Institute on Governance Quick Guide series, \u003Ca href=\"https://www.baselgovernance.org/publications?type=2428\">ISSN 2673-5229\u003C/a>.",[21,22,23,24],"English","French","Portuguese","Spanish",[],[27,31],{"tags_id":28},{"id":29,"name":30},879,"Money laundering",{"tags_id":32},{"id":33,"name":34},854,"Virtual assets",{"id":36,"title":37,"slug":38,"image":39,"type":40,"date_published":42,"publisher":43,"summary":7,"body":44,"area":7,"programme":7,"languages":45,"countries":46,"tags":89},2192,"Working Paper 38: Cryptocurrencies in Asia and beyond: law, regulation and enforcement","wp-38","59ac2444-660e-4bca-97ed-9bf49f8d3b0f",[41],"Working Paper","2022-05-12","Basel Institute on Governance; The Academy of Financial Crime Litigators","The crypto industry has exploded in recent years, and authorities in different countries have been reacting in very different ways. Some have banned cryptocurrencies, while others are embracing them to varying degrees. Some are working hard to align their anti-money laundering regulations with FATF standards, while others are turning a blind eye. A few countries have confiscated huge quantities of crypto assets linked to crime and money laundering. Others are at square one in terms of enforcement, risking becoming a hub for crypto crime and money laundering and posing a serious vulnerability in the world’s financial system.\n\nThis Working Paper draws on a detailed analysis of how selected countries are addressing legal, regulatory and enforcement issues around cryptocurrencies and other virtual assets. The analysis is focused on Asia, but set in the context of global trends in crypto law, regulation and enforcement. It explores critical questions that will shape policies around virtual assets at the corporate, national and international levels:\n\n\n- What is working in terms of crypto regulation and enforcement?\n- What are the implications of different policy choices on crypto assets – for the industry, for the countries themselves and for global financial integrity as a whole?\n- What would the crypto wave possibly bring next?\n\n\nThe Paper also highlights broader developments needed to bring light and clarity to laws, policies and practices around the crypto industry, such as collaboration between both market players and governments.\n\nJurisdictions touched upon in this Working Paper alphabetically include Bhutan, Central African Republic, El Salvador, Hong Kong SAR, India, Indonesia, Japan, Kazakhstan, Malaysia, Myanmar, Russia, Singapore, South Korea, the Philippines, the People’s Republic of China, Thailand, Ukraine and Vietnam.\n\nA list of key terms and abbreviations have been prepared in the Annex to this Working Paper for the readers’ easy reference.\n\n### About this Working Paper\n\nThis Working Paper is a collaboration between \u003Ca href=\"http://www.zhonglun.com/Content/2016/10-14/1643525035.html\">Dorothy Siron\u003C/a>, Co-Managing Partner, Zhong Lun Law Firm LLP and \u003Ca href=\"https://baselgovernance.org/about/people/federico-paesano\">Federico Paesano\u003C/a>, Senior Financial Investigation Specialist, Basel Institute on Governance.\n\nDorothy Siron provided the bulk of the analysis and discussion, while Federico Paesano provided a selection of case studies and was co-author of the seven recommendations contained in section 4. The collaboration was facilitated by the \u003Ca href=\"https://www.financialcrimelitigators.org/\">International Academy of Financial Crime Litigators\u003C/a>, an independent, non-partisan global centre that shapes and advances financial crime litigation practices for the future.\n\nThe publication is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650. It is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (\u003Ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">CC BY-NC-ND 4.0\u003C/a>).\n\n**Suggested citation:** Siron, Dorothy, and Federico Paesano. 2022. “Cryptocurrencies in Asia and beyond: law, regulation and enforcement.” Working Paper 38, Basel Institute on Governance. Available at: \u003Ca href=\"https://baselgovernance.org/publications/wp-38\">https://baselgovernance.org/publications/wp-38\u003C/a>\n\n**Disclaimer:** This Working Paper does not, and is not intended to, constitute and/or substitute legal or other professional advice. The content of this Working Paper is updated as of 4 May 2022 and is intended for general informational purposes only. No representations have been made as to its accuracy and completeness. You should seek independent legal or other professional advice before acting or relying on any of the information contained herein.",[21],[47,50,53,56,59,62,65,68,71,74,77,80,83,86],{"countries_id":48},{"name":49},"Bhutan",{"countries_id":51},{"name":52},"El Salvador",{"countries_id":54},{"name":55},"China",{"countries_id":57},{"name":58},"India",{"countries_id":60},{"name":61},"Indonesia",{"countries_id":63},{"name":64},"Japan",{"countries_id":66},{"name":67},"Kazakhstan",{"countries_id":69},{"name":70},"Malaysia",{"countries_id":72},{"name":73},"Myanmar [Burma]",{"countries_id":75},{"name":76},"Russia",{"countries_id":78},{"name":79},"Thailand",{"countries_id":81},{"name":82},"Ukraine",{"countries_id":84},{"name":85},"Vietnam",{"countries_id":87},{"name":88},"Central African Republic",[90,92],{"tags_id":91},{"id":33,"name":34},{"tags_id":93},{"id":94,"name":95},818,"Anti-money laundering",{"id":97,"title":98,"slug":99,"image":100,"type":101,"date_published":102,"publisher":18,"summary":7,"body":103,"area":7,"programme":7,"languages":104,"countries":105,"tags":106},1799,"Quick Guide 22: Analysing a suspect’s financial affairs in a corruption case","quick-guide-22-analysing-suspects-financial-affairs-corruption-case","2eaddf79-db96-47b3-b468-464c15fed38f",[16],"2021-07-04","This quick guide explains how investigators and prosecutors can use Source and Application of Funds analysis to inform corruption and money laundering investigations and prosecutions and to generate evidence for use in court.\n\nThe method enables anti-corruption officers to build financial profiles of suspects by systematically calculating the amount of money that the suspect has accumulated and spent during a particular period, compared to their legal and known income. \n\nIt is authored by the \u003Ca href=\"https://baselgovernance.org/asset-recovery/training-programmes\">Training team\u003C/a> of the International Centre for Asset Recovery, which trains law anti-corruption officers around the world in the use of Source and Application of Funds analysis as part of financial investigations and criminal proceedings for corruption and money laundering offences.\n\nThe Basel Institute also provides a \u003Ca href=\"https://learn.baselgovernance.org/mod/url/view.php?id=2999\">free eLearning course\u003C/a> on Source and Application of Funds analysis and has published a technical guidance document on the method with specific application to \u003Ca href=\"https://learn.baselgovernance.org/mod/resource/view.php?id=2998\">illicit enrichment cases\u003C/a>.\n\n### About this Quick Guide\n\nThis work is licensed under a \u003Ca href=\"https://creativecommons.org/licenses/by-nc-nd/4.0/\">Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License\u003C/a>. It is part of the Basel Institute on Governance Quick Guide series, \u003Ca href=\"https://www.baselgovernance.org/publications?type=2428\">ISSN 2673-5229\u003C/a>.",[21],[],[107],{"tags_id":108},{"id":109,"name":110},1193,"Financial investigations",{"id":112,"title":113,"slug":114,"image":115,"type":116,"date_published":117,"publisher":18,"summary":7,"body":118,"area":7,"programme":7,"languages":119,"countries":120,"tags":121},1902,"Working Paper 28: Regulating cryptocurrencies: challenges and considerations","working-paper-28-regulating-cryptocurrencies-challenges-and-considerations","d7dfe609-5226-4908-85fd-de4680a3c0d4",[41],"2019-04-29","Cryptocurrency regulations are developing fast. Across the world, authorities are reacting to the emerging threat posed by criminals using new payment methods to conceal and launder the proceeds of their crimes.\n\nHowever, as the application of anti-money laundering/combating the financing of terrorism (AML/CFT) due diligence requirements becomes stricter and more entities implement preventative measures, criminals are constantly looking elsewhere for potential havens for their illicit activities.\n\nThis Working Paper offers an insight into some potential consequences of changes in AML/CFT legislation in relation to cryptocurrency exchange services and virtual assets.\n\nThis paper is part of the Basel Institute on Governance Working Paper Series, \u003Ca href=\"/publications?type[]=255\">ISSN: 2624-9650\u003C/a>.",[21],[],[122,124],{"tags_id":123},{"id":33,"name":34},{"tags_id":125},{"id":94,"name":95},[127,141,162],{"id":128,"title":129,"slug":130,"image":131,"type":132,"date":133,"body":134,"language":7,"tags":135,"translations":140},9635,"Will new FinCEN rules drive cryptocurrency users underground? ","will-new-fincen-rules-drive-cryptocurrency-users-underground-1954","77aea851-2cfd-434e-95ce-648320fee21d","Blog","2021-01-07","_\\*\\* Update: After this blog was published, FinCEN announced an extension to the comment period for the proposed regulation on transactions to and from so-called unhosted wallets. [See details here](https://www.fincen.gov/news/news-releases/fincen-extends-comment-period-rule-aimed-closing-anti-money-laundering).\\*\\*_\n\nA major topic at our most recent [training course on Cryptocurrencies and Money Laundering](https://baselgovernance.org/courses-and-events/cryptocurrencies-and-anti-money-laundering-training) was the so-called “travel rule” introduced in June 2019 by the Financial Action Task Force (FATF), the international standard-setter for money laundering. There were questions over the implications for virtual asset service providers (VASPs), including banks and money services businesses.\n\nOver the Christmas period, the U.S. Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking that pushes the idea behind the travel rule yet further and has significant implications for VASPs – as well as for the evolution of cryptocurrencies in general. The 12-day comment period expired on 4 January and the rule appears set to be introduced “as quickly as feasible”.\n\nFast and bold moves to strengthen anti-money laundering measures are usually welcome, but in this case many cryptocurrency experts are raising concerns. What does the proposed FinCEN rule mean and why is there controversy?\n\n## What is the FATF travel rule?\n\nThe travel rule in the FATF _[Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers](http://www.fatf-gafi.org/publications/fatfrecommendations/documents/guidance-rba-virtual-assets.html)_ extends its existing Recommendation 16 on wire transfers to virtual assets such as cryptocurrencies and to VASPs. It means the originators and beneficiaries of all transfers of virtual assets must exchange identifying information, guarantee its accuracy and provide the information to law enforcement if required.\n\nVASPs now have to verify not only the identity their customers – standard practice anyway in all regulated jurisdictions – but the recipients of their customers’ transfers. The same applies to the VASP receiving the transaction. As with any other financial institution, VASPs are also required to monitor wire transfers for completeness. They need to take steps to prohibit transactions with designated (sanctioned) persons or entities and report such incidents to the local Financial Intelligence Unit.\n\n## What about unhosted wallets?\n\nSo far so clear. But what happens when the beneficiary or the originator of a transaction is not a customer of another regulated entity? What if a transaction is going from a verified account to an “unhosted” wallet?\n\nSelf-hosted or unhosted wallets are not provided or “hosted” by a financial institution or cryptocurrency service. Instead, they sit on a user's computer or offline, for example Trezor or Ledger. The holder of the virtual assets controls the private keys associated with the addresses and can store or use them without the need of any third party. Such transactions fall outside the scope of the travel rule and of the U.S. Bank Secrecy Act.\n\nSome regulators see unhosted wallets as a facilitator for illicit activities and money laundering using cryptocurrencies. FinCEN – the U.S. Financial Intelligence Unit – seems to be among them.\n\n## The FinCEN proposal for unhosted wallets\n\nOn 23 December 2020, FinCEN issued a proposal for [Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets](https://www.federalregister.gov/documents/2020/12/23/2020-28437/requirements-for-certain-transactions-involving-convertible-virtual-currency-or-digital-assets). It extends regulatory requirements for transactions involving virtual assets to “unhosted wallets” or “other covered wallets”, meaning wallets held at certain foreign financial institutions not subject to the U.S. Bank Secrecy Act.\n\nIf adopted, the rule will impose significant obligations on VASPs for recordkeeping, reporting and identity verification. If a customer makes or receives a transaction where the counterparty is using such a wallet, the VASP will be obliged to:\n\n*   Verify the identity of their customer, and record the name and physical address of their counterparties, for transactions over USD 3,000;\n*   File Currency Transaction Reports where a customer undertakes aggregate transactions of USD 10,000 or greater in a 24-hour period, including the name and physical address of transaction counterparties.\n\nCiting “substantial concerns about national security”, FinCEN appears ready to issue a final version of the rule with near-immediate effect, without the usual 30 days allowed between the announcement of a final rule and its effect. This will leave little time for the affected entities to build the infrastructure to comply with the rule.\n\nBut beyond the fast pace of the rulemaking and additional burden on VASPs, there are concerns about its fundamental intention and effects.\n\n## Going (too far) beyond the travel rule?\n\nThe proposal states that the recordkeeping requirement “is similar to the recordkeeping and travel rule regulations pertaining to funds transfers and transmittals of funds”, i.e. the above-mentioned FATF travel rule. However, the travel rule is profoundly different.\n\nThe travel rule concerns transactions between two regulated financial institutions and does not apply when the counterparty is an individual. In contrast, the FinCEN proposal applies to transactions with individuals using unhosted wallets.\n\nContrary to what FinCEN fears, i.e. that unhosted wallets are mainly used for illicit activity, leading blockchain analysis company Chainalysis [has demonstrated](https://blog.chainalysis.com/reports/treasury-department-nprm-unhosted-wallets-2020) that the primary use of unhosted wallets is by individuals and organisations to either store their cryptocurrency for investment purposes, or move it between regulated trading platforms.\n\nAn analysis of bitcoin transactions in Q2 of 2020 revealed that 92 percent of bitcoin sent among unhosted wallets originally came from a regulated VASP. Sixty-seven percent went back to a regulated VASP in that same quarter. Chainalysis concludes that: “law enforcement and regulators can therefore usually trace suspicious activity involving unhosted wallets back to regulated exchanges, regardless of how many times the funds passed through unhosted wallets.”\n\nMoreover, the fact that 70 percent of bitcoin withdrawn to an unhosted wallet does not move to another unhosted wallet “strongly suggests that its primary use is as an investment”.\n\nIf this is correct – and it deserves serious attention – then the proposed rule will bring few benefits to law enforcement while hampering customers’ privacy and diverting the resources of VASPs away from developing their services to complying with unnecessary regulations.\n\n## Comparison with cash\n\nCryptocurrency transactions function similarly to cash, but, unlike cash, leave a permanent trace in the blockchain that can be followed and investigated even years after the event. This means we would not expect to see stricter requirements for virtual assets as opposed to “old” cash transactions.\n\nHowever, the recordkeeping (when the transaction is above USD 3,000) and reporting (when the transaction is above USD 10,000) requirements in the FinCEN proposal seems to apply a stricter standard to transactions to individuals when they involve virtual assets rather than cash. VASPs will need to collect information about individuals who are not customers and have not consented to this data collection and sharing. Why should a USD 3,000 transaction from a VASP to an unhosted wallet be considered riskier than a USD 3,000 transaction to an individual in cash?\n\n## Privacy considerations\n\nTechnological limitations will also make it difficult to identify and collect the counterparty information required, since that information is not always available. One of the uses of cryptocurrency is to transfer money among individuals without exchanging sensitive information like the name and address of the parties involved. The proposed rule requires VASPs to collect exactly the information that cryptocurrency helps to keep private.\n\nImagine you wish to use your cryptocurrency account with a regular VASP to buy a good from a person who, for privacy, doesn’t want to share her name and location. How can you provide your VASP with that information if you don’t know it yourself?\n\n## The risk of driving cryptocurrency underground\n\nIn recent years we have created a safe and regulated environment that lets the exciting world of cryptocurrency flourish while giving the possibility to law enforcement agencies to investigate its criminal uses. Of course, money laundering regulations need to evolve to address new threats and weaknesses. But overly strict regulations, imposed without sufficient consultation or a clear purpose, could seriously harm this mechanism.\n\nCryptocurrency was imagined and created for person-to-person transfers. The pseudonymous creator of Bitcoin, the most well-known of the cryptocurrencies, described it as a “peer-to-peer electronic cash system” aimed at keeping middlemen out of the picture. It is not hard to imagine that the proposed approach would likely drive a significant number of actors out of the regulated system to places where regulators and law enforcement have no reach or visibility.\n\nAs I described in my 2019 Working Paper on _[Regulating Currencies: Challenges and Considerations](https://baselgovernance.org/publications/working-paper-28-regulating-cryptocurrencies-challenges-and-considerations)_, the risk is to create parallel value transmitting systems. One is fully regulated and transparent, with each and every transaction having identified senders and receivers, much like in the traditional financial sector. The second can, thanks to new technologies, easily bypass those regulations. Chief among such new technologies are “privacy coins” like Monero or ZCash, which employ a number of techniques to provide its users with complete anonymity.\n\nSo, what if a system like the one described above, where only identified and vetted persons could interact economically, were to be implemented? This would likely drive almost all, if not all of the criminal activity towards unregulated cryptocurrencies and foster greater demand for other privacy solutions.\n\nAnd it would take legitimate activity with it as well, because citizens are becoming conscious of the personal and economic value of their personal data and are willing to take steps to prevent it being used for government surveillance or marketing. Financial transactions can reveal a tremendous amount of information, not just about the volume and recipients of transfers, but also about location, social networks, gender, sexual orientation, political views or medical history. There are legitimate reasons why certain people, such as political activists and investigative journalists, wish to remain anonymous.\n\nAn initial shift towards more anonymity could, thanks to the network effect, drive more and more citizens to use privacy-enhancing solutions such as privacy coins.\n\n## Shooting ourselves in the foot?\n\nImposing additional administrative burdens on innovative and dynamic VASPs – ones that result in high operational costs with little benefit for law enforcement – will push criminals and their dirty money even deeper into the blackness of the darknet. Cryptocurrency transactions will drift away to unregulated channels and privacy-centred cryptocurrencies that are opaquer to FinCEN and other law enforcement.\n\nExactly the opposite of what FinCEN expressed many times in the past and its Director, Kenneth A. Blanco, already identified as possible concerns when talking at the [Consensus Blockchain Conference](https://www.fincen.gov/news/speeches/prepared-remarks-fincen-director-kenneth-blanco-delivered-consensus-blockchain) in May 2020. Exactly the opposite of the proposal’s intention.\n\nMoreover, due to the influence of the U.S. in the FinTech market, this affects not only U.S.-based VASPs and law enforcement agencies. It affects all of us, all over the world, including users and including the future evolution of cryptocurrencies.\n\n## Cryptocurrencies and AML training\n\nOur next training course on cryptocurrencies and anti-money laundering takes place on 8–11 February 2020. The course aims to help practitioners from a wide range of law enforcement, financial and business sectors prevent, detect and investigate the use of cryptocurrencies for illicit activities. [Find out more and reserve your space.](https://baselgovernance.org/courses-and-events/cryptocurrencies-and-anti-money-laundering-training)",[136,138],{"tags_id":137},{"id":33,"name":34},{"tags_id":139},{"id":94,"name":95},[],{"id":142,"title":143,"slug":144,"image":145,"type":132,"date":146,"body":147,"language":7,"tags":148,"translations":161},9655,"New online course on cryptocurrencies and anti-money laundering","new-online-course-on-cryptocurrencies-and-anti-money-laundering-1922","d0257c81-34ab-434b-95e7-2b2144249399","2020-11-23","The Basel Institute on Governance is offering a new [Cryptocurrencies and Anti-Money Laundering Compliance Training course](https://baselgovernance.org/courses-and-events/cryptocurrencies-and-anti-money-laundering-training) aimed at law enforcement officials, professionals in AML compliance and FinTech/RegTech fields, as well as policymakers and investigative journalists.\n\nDelivered over four three-hour online sessions, the course covers the essentials of how to detect and prevent the use of virtual assets for illicit activities. \n\nIn this short article below, course leaders Federico Paesano and Phyllis Atkinson explain why it’s vital for a wide range of stakeholders in the public and private sectors to be able to investigate and defend themselves against criminals’ abuse of cryptocurrencies and other virtual assets.\n\n## Cryptocurrencies at the centre of attention\n\nCryptocurrencies have become an increasingly prominent topic of discussion amongst both public and private sector professionals involved in the prevention and combatting of money laundering. The most well-known cryptocurrency, Bitcoin, has generated a lot of interest, particularly as the media continues to cover a number of high-profile investigations and prosecutions worldwide.\n\nThe notoriety of this currency is not ill-founded. The apparent anonymity and invisibility that cryptocurrencies offer is progressively attracting more and more international criminals and money launderers. \n\n## Financial flows that fly under the radar\n\nCryptocurrencies have characteristics that can confound the efforts of the authorities and make such mediums attractive to the informal and illegal economies.\n\nNotably, they appear to offer the much-craved anonymity and, indeed, invisibility that organised crime requires. In a strongly regulated formal financial sector, this is increasingly difficult to find.\n\nThis perceived anonymity is the main attraction of cryptocurrency as a medium for laundering the proceeds of crime. Although the main cryptocurrency exchanges exercise Know-Your-Customer (KYC) and due diligence procedures, there are a number of other options to purchase bitcoins or other cryptocurrencies privately between individuals and bypass online exchanges completely.\n\nFortunately, as we will cover during the course, cryptocurrency is not as anonymous as many people imagine. Intrinsic characteristics of the blockchain, coupled with an understanding of users’ habits and the use of sophisticated investigative techniques employed by law enforcement, make it possible to identify users.\n\nPut into the context of grand corruption and organised crime scenarios, the use of cryptocurrencies is an example of the ever-evolving tactics employed by criminals to frustrate financial investigations and launder illicit assets.\n\n## How law enforcement and compliance professionals can keep up\n\nWe now have numerous successful criminal investigations where proceeds of crime, laundered through the use of cryptocurrencies, have been recovered. Contrary to popular belief, what makes Bitcoin and other cryptocurrencies work has significant benefits for law enforcement as well.\n\n*   A public and freely accessible ledger of every transaction ever conducted allows law enforcement to trace transactions in a way that would never have been possible before.\n*   Being borderless, law enforcement can access information without some of the barriers of international cooperation that can hinder cross-border investigations.\n*   Since it is immutable, there is no risk that the data will be unavailable after a few months.\n*   There are various techniques that make attribution a task that is within the reach of not only law enforcement but also compliance professionals in the private sector.\n\n## About the course\n\nThis course is meant to address an audience of law enforcement and professionals dealing, at different levels, with virtual assets. The course will deepen the experience and expertise of practitioners in understanding cryptocurrencies and the risks associated. The participants will explore the legislative frameworks and learn how to trace illicit financial flows channelled through cryptocurrency.\n\nGiven the inevitable overlap between virtual assets and ordinary assets such as fiat currency, real estate, yachts and jewellery, this course also touches briefly on the issue of beneficial ownership. Assets acquired as a result of criminal activity in the form of cryptocurrency may well be exchanged for other assets, thus requiring the identification, tracing and seizure of the proceeds of crime. Determining the beneficial owner of illicit assets remains an integral part of the process, and represents a significant challenge to practitioners across the globe.\n\nThe workshop will be centred around a practical case scenario building on known and potential uses to “clean” stolen assets for integration into the financial system. Participants will be asked to trace transactions through the blockchain.\n\nThis practical exercise will be interspersed with key presentations, starting from the basics of cryptography, exploring how cryptocurrencies work, how to use the blockchain in financial investigations, understanding compliance and due diligence, through to the final recovery of assets.\n\nA presentation on European Union Anti-Money Laundering Directives (EU AMLDs) and Ultimate Beneficial Ownership (UBO) requirements, and the use of layering and direct ownership chains by beneficial owners, will be included.\n\nThe training will also take advantage of an external speaker, Christine Gschwend from MME Legal, a renowned expert on compliance and anti-money laundering. She will cover the compliance and legal aspects of cryptocurrency and virtual assets, and the way the private sector can be compliant with the legislation set forth internationally. \n\n## How to sign up\n\nThe next course will take place in English from 7–10 December 2020 (09:00–12:30 CET each day with a half-hour break). The fee is CHF 500 per person, with a discounted rate of CHF 200 per person available to members of public-sector, international, non-profit and academic organisations, plus independent journalists.\n\n[Find out more and book your space now!](https://baselgovernance.org/courses-and-events/cryptocurrencies-and-anti-money-laundering-training)",[149,151,155,157],{"tags_id":150},{"id":33,"name":34},{"tags_id":152},{"id":153,"name":154},1372,"Training",{"tags_id":156},{"id":94,"name":95},{"tags_id":158},{"id":159,"name":160},1236,"Compliance",[],{"id":163,"title":164,"slug":165,"image":166,"type":132,"date":167,"body":168,"language":7,"tags":169,"translations":170},9885,"Federico Paesano's quick guide to cryptocurrencies and money laundering","federico-paesanos-quick-guide-to-cryptocurrencies-and-money-laundering-849","54a875c6-2ad8-45f2-95e7-c689d1540af3","2019-03-15","When I and the other founding members of the Working Group on Cryptocurrencies and Money Laundering first started talking about blockchain and anti-money laundering/countering terrorist financing (AML/CFT) back in 2014, it was a tiny niche. There was basically only one cryptocurrency around (Bitcoin), only one case of money laundering to discuss (Silk Road) and only 20 of us in a room at the University of Basel.  Now there are hundreds of people attending our annual [Global Conference on Criminal Finances and Cryptocurrencies](https://www.europol.europa.eu/events/3rd-global-conference-criminal-finances-and-cryptocurrencies), dozens of new cryptocurrencies and soaring numbers of cryptocurrency-related money laundering cases uncovered every week.\n\n## What kind of money laundering cases involve cryptocurrencies?\n\nSome cases involve criminals using cryptocurrencies to launder “normal” proceeds of crime or corruption. A corrupt official receiving bribes and trying to hide the origin of the money through a maze of transactions in bitcoins, for example. Most often, though, we’re talking about crimes that generate profits in cryptocurrency. The trade in drugs and other illegal goods on the dark web. Ransomware like WannaCry. Kidnapping and ransom payments. Terrorist financing: Europol’s [Virtual currencies and terrorist financing report](http://www.europarl.europa.eu/RegData/etudes/STUD/2018/604970/IPOL_STU(2018)604970_EN.pdf) in May 2018 describes how the terrorist group ISIS used Bitcoin and Zcash to collect donations. More widespread awareness of how cryptocurrencies work could help financial institutions, FIUs and law enforcement authorities detect more cases more quickly – and choke off a fast-growing avenue for criminals to both gather and launder the proceeds of their crimes.\n\n## Following the (virtual) money\n\nThe blockchain technology behind cryptocurrencies theoretically makes it easier for financial investigators to “follow the trail of the money”. Why? Because each transaction is recorded permanently in a shared ledger that cannot later be altered or falsified. The money-trail will theoretically stay there forever, ready to become evidence even years later.  Bitcoin transactions include the time and amount of the transaction, whereas smaller and more privacy-focused cryptocurrencies such as Monero and Zcash conceal this information. What’s tricky in all cases is linking transactions and user accounts to real people in the real world. In other words, identifying potentially criminal transactions and the criminals behind them. It is the so-called “attribution” problem: heuristics are used to create clusters, i.e. groups of transactions which are likely done by the same entity, and then techniques are applied to de-anonymise those clusters.\n\n## Everyone can learn it – and should\n\nBlockchain, cryptocurrencies, AML… it’s a fast-changing field, with new tools constantly being developed and upgraded to help law enforcement stay one step ahead of the criminals. The Financial Action Task Force – the inter-governmental body responsible for AML/CFT policies and supervision – is actively focused on clarifying how the standard risk-based approach to money laundering applies to [virtual assets](http://www.fatf-gafi.org/publications/fatfrecommendations/documents/regulation-virtual-assets.html). But for those on the front line of financial crime – police officers, compliance professionals, financial institutions – you don’t need to be an expert. In fact, it is surprisingly quick and easy to gain the knowledge you need to detect risks and red flags involving cryptocurrencies and escalate them. Once you know what to look for, you can detect the criminal activity and take the first steps towards securing the ill-gotten funds and preserve the evidence. And you really, really do need to know this. Because here’s the thing: whatever form cryptocurrency-enabled crime takes in the future, it is here to stay.\n\n## Want to learn more?\n\nFull disclosure: I co-lead a two-day FinTech AML Compliance Training course in collaboration with Swiss law firm MME. It’s designed to help financial institutions and FinTech/RegTech management, policymakers and compliance professionals detect and prevent the use of cryptocurrencies for illicit activities. [Find out more](/node/755/). But however you choose to learn about blockchain, cryptocurrencies and the risks around AML/CFT, please do. Otherwise, at the next Global Conference on Criminal Finances and Cryptocurrencies in 2021, there’ll be hundreds of thousands of cases, if not more. [Download a PDF of this quick guide.](https://www.baselgovernance.org/sites/default/files/2020-08/qg1_cryptocurrencies.pdf)",[],[],1784560125382]