Earlier this month, a joint meeting in Switzerland between Europol, INTERPOL, and the Basel Institute on Governance took place regarding the handling of cryptocurrencies. The meeting was well attended, bringing together a group of sixty financial investigators in a workshop that touched on the detection, investigation, seizure and confiscation of cryptocurrencies.
Cryptocurrencies have seen their adoption grow into mainstream investment channels over the past year, prompting a wave of backlash from numerous jurisdictions. In several instances, authorities in China and elsewhere have opted for a ban, while regulators in Europe and the US have taken a more balanced approach.
Given the lack of regulatory clarity surrounding these instruments, the meeting proved quite noteworthy, given the attendees and the topics under discussion. In particular, the event featured leading experts in the field of money laundering, cybercrime and financial intelligence units from upwards of thirty-two countries.
The meeting earlier this month, held on January 15-16 in Basel, Switzerland, was the result of a working group on cryptos that had been established back in September 2016. Following nearly one and a half years of investigation, a committee of organizers had explored the development of strategies for the investigation and recovery of digital criminal proceeds.
Furthermore, the two-day meeting utilized the expertise and insight of several representatives in the private sector, many of whom have had in-depth experience working with such instruments over the past year. The event was noteworthy given the players involved but also the conclusions reached.
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Participants agreed upon a number of different elements surrounding cryptos, including fostering increased information sharing in the field of money laundering and digital currencies via the use of channels such as Europol, INTERPOL, the Egmont Group and FIU.net.
Furthermore, the committee recommended the regulation of crypto exchanges and wallet providers under current anti-money laundering and counter-terrorism financing legislation. Of note, this was in line with obligations already pending within the financial sector, lumping cryptos in with other main street investment instruments.
Representatives also agreed on cohesive definitions of concepts such as cryptocurrencies, digital currency exchanger, wallet provider, etc., which are to be included in the EU legal framework. This helps shore up a previous blind spot in crypto regulation. Finally, the experts concluded that it was necessary to take action against digital currency mixers/tumblers, designed to anonymize transactions, which burdens the work of law enforcement agencies to detect and trace suspicious transactions.
It will be interesting moving forward to see if cryptos are included under the broader mandate of legal framework dealing with other investment instruments in Europe. By placing cryptos under existing legal obligations on the continent, this certainly looks to be the case, with the committee helping strengthen future legislation surrounding digital currencies.
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