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) released the Risk Monitor 2024 report, highlighting a significant increase in money laundering activities through digital assets, particularly cryptocurrencies and stablecoins.
The report also points to the trend of abusing cryptocurrency to evade sanctions, complicating law enforcement efforts and threatening the reputation of Switzerland's financial center.
Challenges in risk management in the digital age
The use of cryptocurrencies in illegal activities poses significant challenges for regulators worldwide. FINMA warns that financial institutions lacking effective risk management strategies will face serious legal and reputational risks. The report emphasizes that money laundering risks are 'potentially very significant' for organizations providing services related to cryptocurrencies. FINMA is concerned that lax management could severely harm the reputation of Switzerland's 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 reiterated concerns about the increasing risks in money laundering, terrorist financing, and sanction evasion, stating that these risks threaten the reputation of the entire Swiss financial center.
In response to the above situation, FINMA has implemented a series of measures, including targeted supervision, enhanced risk management requirements, field inspections, and revisions to the audit program.
This agency also requires financial institutions to clearly define their risk tolerance and implement effective risk management measures, particularly for customers operating in the political field or high-risk areas. Thorough customer risk assessment and the application of appropriate preventive measures are considered key to preventing illegal activities.
Not only regulatory agencies, but also organizations operating in the cryptocurrency sector are striving to enhance anti-money laundering measures. Recently, the stablecoin issuer Tether, the TRON blockchain, and the TRM Labs analytics company established a dedicated unit for combating financial crime to prevent the illicit use of the USDT stablecoin. Cooperation among stakeholders, including regulators, financial institutions, and cryptocurrency companies, is seen as a crucial factor in building a safe and transparent digital financial environment.
