The Swiss Financial Market Supervisory Authority (FINMA) warns of the increasing risk of money laundering in the cryptocurrency sector, demanding stronger risk management measures.
On November 18, the Swiss Financial Market Supervisory Authority (FINMA) published the Risk Monitor 2024 report, emphasizing the significant increase in money laundering activities through digital assets, particularly cryptocurrencies and stablecoins.
The report also points to the trend of misusing cryptocurrencies to evade sanctions, which poses challenges for law enforcement and threatens the reputation of the Swiss financial center.
Challenges in risk management in the digital era
The use of cryptocurrencies in illegal activities poses a major challenge for regulators globally. FINMA warns that financial institutions lacking an effective risk management strategy will face serious legal and reputational risks. The report stresses that money laundering risks "can be very significant" for organizations providing cryptocurrency-related services. FINMA is concerned that lax management could seriously damage the reputation of the Swiss financial center.
This is not the first time FINMA has spoken out on this issue. Earlier this year, the agency recommended that stablecoin issuers and banks verify the identity of token owners to mitigate money laundering risks. FINMA reaffirms its concerns about the increasing risks of money laundering, terrorist financing, and sanctions evasion, which it believes threaten the reputation of the entire Swiss financial center.
To address the situation, FINMA has implemented a series of measures, including targeted supervision, increased risk management requirements, on-site inspections, and revisions to audit programs.
The agency also requires financial institutions to clearly identify their risk appetite and implement effective risk management measures, particularly for customers operating in high-risk political or other high-risk areas. Thorough customer risk assessment and the application of appropriate preventive measures are seen as key to preventing illegal activities.
Not only regulators, but also organizations operating in the cryptocurrency sector are making efforts to strengthen anti-money laundering measures. Recently, the stablecoin issuer Tether, the TRON blockchain, and the analytics firm TRM Labs have established a dedicated unit to combat financial crime in order to prevent the illicit use of the USDT stablecoin. Collaboration between stakeholders, including regulators, financial institutions, and cryptocurrency companies, is seen as a crucial factor in building a safe and transparent digital financial environment.
