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Preventing and detecting the misuse of virtual financial assets: introducing the tools

Technology is rapidly evolving, and this is proven with the development of blockchain technology, cryptocurrencies and other virtual assets. Concurrently, criminals are also advancing in terms of technology use since traditional crimes such as money laundering, theft, drug trafficking and financing of terrorism are being shifted to the cyber world.

The prevention of money laundering and financing of terrorism has been at the forefront of discussions across the globe. The development of virtual assets led countries and organisations to rethink the risks that may arise.

US-based blockchain and cryptocurrency security firm, CipherTrace, often outlines the impact of money laundering and financing of terrorism in terms of the cyberworld. The company issues a report on a quarterly basis which emphasises the importance of having the right security measures to prevent and detect money laundering in such environment.

Money laundering threats from the virtual world

Technology may assist criminals to obscure the legitimacy of virtual assets as they attempt to exploit the various weaknesses of an organisation and its systems to fulfil their purposes. For instance, the Cryptocurrency Anti-Money Laundering (AML) reports issued by CipherTrace estimate that criminals gained around $4.26 billion for the first six months of 2019 from thefts of cryptocurrencies. Factors such as anonymity and the lack of tools would increase the risk of criminals to succeed in their attempt to launder money.

Furthermore, money launderers tend to use multiple organisation and/or services to launder illegal assets. Virtual assets may be moved around the blockchain network in order to build a complicated web of transactions and mislead the organisations and investigators.

Subsequently, illegitimate virtual assets may be introduced into the mainstream financial system with little or no risk of detection or they are used to finance activities which span from weapon trading and drug trafficking to the financing of terrorist groups on the dark web.

Prevention is better than cure…

The shift from traditional money laundering to digital money laundering requires organisations to be in a position to adequately monitor cryptocurrencies and virtual assets that may reach their systems.

As a result, CipherTrace’s AML (anti Money Laundering) software allows users to map the origin and movement of virtual assets by combining attribution data from private and public intelligence sources with open-source intelligence (OSINT), and scanning the deep web. Furthermore, global exchanges ATMs, money laundering systems, gambling services and known criminal addresses are profiled to assess the risks. Gathered data is then used to assign risk levels to transactions based on activities related to suspicious addresses and wallets.

See CipherTrace in action: call us now!

At Grant Thornton preventing financial crime is a key priority. We can assist our clients, current and prospective, to meet up with CipherTrace with the aim to detect, deter, and defend their organisations.