The Swiss Financial Market Supervisory Authority (FINMA) has spotlighted digital assets as a significant risk for money laundering in its latest Risk Monitor report. This annual publication underscores the role of digital assets in financial crimes like sanctions evasion and emphasizes the need for stricter regulatory oversight.
Cryptocurrencies and Financial Crimes
The 2024 Risk Monitor report identifies cryptocurrencies, especially stablecoins, as increasingly associated with money laundering and illegal activities. Their use in sanctions evasion and dark web transactions has heightened concerns among financial regulators.
“In relation to digital assets, FINMA takes institution-specific measures to mitigate the money laundering risk,” the agency stated.
Swiss financial intermediaries offering crypto-related services face intensified scrutiny to manage these risks. FINMA warns that insufficient risk mitigation in this area could harm individual institutions and tarnish the broader Swiss financial sector’s reputation.
The report further notes: “Cryptocurrencies are often used in cyberattacks or as a means of payment for illegal trading on the dark web.”
Nepal FIU Raises Alarm on Crypto Misuse
Nepal’s Financial Intelligence Unit (FIU), under the Nepal Rastra Bank, has also highlighted rising misuse of cryptocurrencies for money laundering and cyber fraud. Despite a national ban on digital asset trading, the FIU reports that criminals exploit cryptocurrencies to transfer illicit funds across borders, complicating crime detection.
Crypto-Fueled Cross-Border Crimes
The FIU’s latest Strategic Analysis Report reveals that criminals frequently convert illicit funds into cryptocurrencies before transferring them offshore. This practice makes it challenging to trace the flow of illegal money.
Additionally, fraudulent crypto investment schemes have surged in Nepal, often promoted on social media. These scams lure victims with promises of high returns but result in significant financial losses.
Reporting Challenges in Nepal
The FIU identifies underreporting as a significant barrier to tackling crypto-related fraud. Many victims hesitate to report such crimes due to fear of legal repercussions or social stigma, especially given Nepal’s ban on cryptocurrency trading.
Conclusion
Both FINMA and Nepal’s FIU have expressed growing concerns over the misuse of digital assets in financial crimes. Strengthening regulatory frameworks and encouraging transparent reporting are essential to curbing the risks posed by cryptocurrencies
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