8 Signs of Cryptocurrency Laundering Infographic

With the growing popularity of cryptocurrencies, they attract more than just hopeful investors to them. Criminals looking for new ways to defraud and hide illegible money traces have turned to cryptocurrency to launder illicit payments or con the uninitiated and gullible. Make sure the company and clients are informed to avoid being duped.

Shifty Sources

Finding the source of funding is crucial for cryptocurrency trading. Look at the company’s activities, revenue stream, and address. Pay attention to virtual asset amounts, transactions, and activity that originates from or goes to dubious sources.

Virtual asset service providers that operate in nations with lax or absent anti-money laundering or anti-funding of terrorism laws are a particular suspect source. Clients who send and receive virtual assets to and from these nations, particularly those without a home or business location to support such transactions, may be complicit in a scam or unaware participants.

Examine the current crypto exchanges as money laundering is more likely to take place on sites lacking identification verification and transaction history data. Keep an eye out for sudden spikes in activity followed by extended periods of inactivity.

Strange Patterns

Consider looking for a lot of movement followed by lulls because thieves may move to act cautiously with greater frequency but with lesser amounts as they become conscious of the amount that starts an investigation.

Additional virtual asset transaction trends to watch out for include:

  • Payments from several accounts without a valid business reason.
  • Depositing virtual currency and then unjustifiably withdrawing it right away.
  • The profile of the client or their firm does not lend itself to a substantial initial deposit.
  • They traded virtual assets in full or in part within 24 hours.
  • Modest incoming transactions from many unaffiliated wallets are then transferred to another wallet or fully exchanged for fiat money.
  • With no justification from the firm, substantial sums of virtual assets are changed into fiat cash or other virtual assets.

Geographical Dangers

Money launderers sought after locations with laxer regulations. Reputable traders must stay away from these regions because there aren’t any safeguards in place and no regulatory organizations.

Features of Anonymity

Through technical advancements that promote anonymity and make it more difficult to catch corrupt practices, criminals conceal their identities and their financial resources. However, when investors want extra security and protection against theft, these procedures are also employed for valid reasons.

Accountants need to be cognizant of these dangers to create the best procedures to avoid them, such as carefully monitoring the account for additional indications and reporting suspicious transactions (STR) to the authorities.

Accountants Saves The Day

Accountants and asset managers are essential in stopping con artists from gaining access to regional and international financial systems. Financial experts can set the standard for protecting consumers, organizations, and the entire economy until data catches up with the crypto industry’s rapid development.

Exercise Due Diligence

We won half of the fight by finding out as many details as you can regarding a company or client. The current best practice is to “know your business” and “know your customer” (KYB/KYC). Verify the legitimacy and legality of the customer or asset exchange. You are required by law to check clients and companies for penalties.

Beneficial Regulations

Digital currencies must now be covered by the Bank Secrecy Act, per the Anti-Money Laundering Act of 2020. The same regulations that apply to other money services organizations, such as the travel rule, Cash Threshold Reporting, Customer Due Diligence, and Suspicious Activity Reports, now apply to cryptocurrency exchanges.

Regulated or not, bitcoin still has concerns related to money laundering and other problems. How authorities will handle and impose compliance is still up in the air. Furthermore, there is a lack of understanding between financial compliance regulators and cryptocurrency exchanges/ATMs. Crypto operators have little motivation to disclose dishonest behavior. As a result, we ignore patterns and wrongdoing.

Stronger together

The OSCPA is committed to enhancing Ohio’s accounting profession and economy, which ensures that its businesses and people can thrive in a stable and prosperous economy. Our accounting society provides a membership subscription that includes numerous hours of continuing professional education, which helps our members advance their knowledge and careers.

source: https://www.ohiocpa.com/news-resources/news/2022/11/23/accountants-beware-of-these-four-cryptocurrency-money-laundering-risks


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