The Swiss Financial Market Supervisory Authority (FINMA) has raised alarms regarding the risks posed by digital assets, particularly in the context of money laundering. In its latest Risk Monitor report, FINMA detailed the vulnerabilities associated with digital currencies and stressed the need for stringent regulatory measures to combat these risks.
FINMA’s 2024 Risk Monitor Report Overview
The annual report from FINMA brings to light the increasing association of cryptocurrencies, especially stablecoins, with illicit activities such as money laundering and sanctions evasion. The agency has underlined the significant risk these digital assets pose in facilitating financial crimes, including their use in transactions on the dark web.
“In relation to digital assets, FINMA takes institution-specific measures to mitigate the money laundering risk,” the report states, emphasizing the proactive stance taken by the regulator.
Increased Scrutiny on Crypto Services
Swiss financial intermediaries that offer crypto-related services are now under intense scrutiny. FINMA has warned that inadequate risk management in this sector not only endangers individual institutions but also threatens the reputation of the wider Swiss financial landscape.
The report points out that “cryptocurrencies are often used in cyberattacks or as a means of payment for illegal trading on the dark web,” highlighting the variety of threats that digital assets present.
Concerns from Nepal’s Financial Intelligence Unit
Similarly, the Financial Intelligence Unit (FIU) of Nepal has sounded the alarm over the rising misuse of cryptocurrencies in money laundering and cyber fraud schemes. Despite a national ban on digital asset trading, the FIU has observed that criminals continue to exploit cryptocurrencies to transfer illicit funds internationally, complicating efforts to trace these financial crimes.
In its recent “Strategic Analysis Report,” the FIU revealed that perpetrators often convert dirty money into cryptocurrencies before moving it offshore, significantly hindering investigative processes.
Fraudulent Schemes Targeting Citizens
The report also details a disturbing trend: a rise in fraudulent crypto investment schemes targeting Nepalese citizens. These schemes are proliferating through social media platforms, where fraudsters promise unrealistic high returns, only for victims to end up losing their investments.
Challenges in Reporting Crypto-related Crimes
A significant obstacle in tackling crypto-related fraud in Nepal is underreporting. Many individuals, concerned about potential legal repercussions or social stigma associated with the ban on cryptocurrency trading, are reluctant to report such incidents. This lack of visibility hampers the FIU’s efforts to combat financial crimes and protect citizens from fraud in the digital asset space.