• FINMA flags rising crypto money laundering risks, urging stronger oversight and risk management measures.  

  • Stablecoins increasingly misused for sanctions evasion, complicating anti-money laundering enforcement efforts.  

  • The Swiss crypto sector faces legal, reputational risks without robust compliance and identity verification practices. 

Switzerland's FINMA has raised concerns about higher money laundering risks in the cryptocurrency industry. The concern was discussed in the 2024 Risk Monitor report, which lists weaknesses associated with digital assets such as cryptocurrencies and stablecoins. 

https://twitter.com/FCryptoGiveaway/status/1859442536546214369

The report pointed out that stablecoins are more commonly being used in unlawful activities, such as evading sanctions. This tendency has made enforcement more challenging. FINMA stated that Switzerland's financial sector could suffer reputation damage if financial intermediaries lack proper controls. 

Stablecoins and Illicit Activities

FINMA observed an increase in the utilization of stablecoins for illicit activities. Stablecoins are being utilized for cyberattacks and avoiding geopolitical sanctions. Engaging in crypto services exposes financial institutions to considerable legal and reputational risks. 

FINMA also stressed that intermediaries with inadequate money laundering controls face severe consequences. These range from legal penalties to reputational damage, especially in high-risk sectors or dealings with politically exposed persons.

Enhanced Measures to Mitigate Risks

FINMA has implemented targeted measures including stricter oversight and enhanced risk management requirements. The regulator has also conducted on-site inspections and revamped its audit programs. These actions aim to improve compliance and reduce vulnerabilities.

In addition, FINMA emphasized the importance of clear risk tolerance definitions. It urged financial institutions to adopt effective strategies to manage risks tied to digital assets.

Industry Collaboration on Anti-Money Laundering

Earlier this year, FINMA issued guidelines requiring stablecoin issuers and banks to verify token holders' identities. These steps aim to curb the misuse of digital currencies.

Meanwhile, private crypto organizations have joined efforts to combat financial crimes. For instance, Tether, TRON, and TRM Labs recently formed a unit to address the misuse of stablecoins. 

These initiatives complement FINMA's efforts to ensure the integrity of Switzerland’s financial system. Switzerland remains committed to maintaining its reputation as a secure and transparent financial hub.

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