Switzerland’s Financial Market Supervisory Authority (FINMA) has issued a warning regarding the risks of money laundering associated with cryptocurrencies. This caution was included in their 2024 Risk Monitor report, where the regulator highlighted that cryptocurrencies, including stablecoins, are increasingly being utilized for cyberattacks, illegal activities on the dark web, and evading sanctions related to geopolitical conflicts.
Of particular concern is the surge in illicit transactions involving stablecoins, which has further complicated efforts to combat money laundering. To address these risks, FINMA has outlined various measures, including onsite reviews, an overhaul of their audit program, and a focus on risk tolerance and management for entities with politically exposed customers or connections to high-risk regions.
Regarding digital assets, FINMA stated that they take institution-specific actions to mitigate the risk of money laundering, employing targeted oversight to effectively address vulnerabilities. Earlier this year, the regulator published guidelines that require stablecoin issuers to verify the identities of token holders and beneficial owners as a means of addressing associated risks.
FINMA also warned that financial intermediaries operating in the crypto sector without proper risk management measures could face legal consequences and reputational damage.
It is important to note that regulatory concerns surrounding cryptocurrencies and stablecoins extend beyond Switzerland. Globally, these digital assets and related businesses have drawn attention due to potential links to money laundering and illicit activities, leading to heightened scrutiny and calls for enhanced oversight across jurisdictions.
In May, the UK Financial Conduct Authority identified crypto-asset firms as one of the sectors most susceptible to money laundering in 2022-23. Consequently, the regulator has implemented a rigorous registration process for crypto businesses to counter these risks.
Platforms such as Binance, KuCoin, and others have also faced scrutiny in connection with allegations of money laundering over the years. Tether, the issuer of the largest stablecoin USDT, has long been accused of facilitating money laundering and other illicit activities. Recently, the company faced renewed scrutiny following reports of an investigation by the US Department of Justice into potential violations of sanctions and anti-money laundering regulations. However, Tether has denied any wrongdoing, stating that they have not received any indication of an investigation.
In a separate development, Tether unveiled a statue in Switzerland to honor the legacy of the Bitcoin creator, which has garnered attention in the crypto community.