Swiss FINMA Highlights Money Laundering Risks in Digital Assets

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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November 18, 2024 15:35 EST

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The Swiss Financial Market Supervisory Authority (FINMA) identified digital assets as a high-risk area for money laundering in its latest Risk Monitor report.

In the annual report, FINMA emphasized the vulnerabilities of digital assets, highlighting their use in financial crimes such as sanctions evasion and the importance of robust regulatory oversight to mitigate these risks.

FINMA Issues 2024 Risk Monitor Report

The report highlighted that cryptos, particularly stablecoins, are increasingly linked to money laundering and other illegal activities. This includes their use in sanctions evasion and transactions on the dark web, which has amplified concerns among financial regulators.

“In relation to digital assets, FINMA takes institution-specific measures to mitigate the money laundering risk,” said the agency.

Swiss financial intermediaries offering crypto-related services are under heightened scrutiny to manage these risks. According to FINMA, poor risk mitigation in this area jeopardizes individual institutions and poses reputational risks to the broader Swiss financial sector.

“Cryptocurrencies are often used in cyberattacks or­ as­ a­ means­ of­ payment­ for ­illegal­ trading ­on­ the dark web,” the report read.

Nepal FIU Warns of Rising Crypto Misuse in Money Laundering

Nepal’s Financial Intelligence Unit (FIU), operating under the Nepal Rastra Bank, has also raised concerns about the recent increase in the misuse of cryptocurrencies for money laundering and cyber fraud.

Despite a national ban on digital asset trading, the FIU reported that fraudsters use cryptocurrencies to move illicit funds across borders, complicating efforts to trace financial crimes.

According to the FIU’s latest “Strategic Analysis Report,” criminals often convert illicit money into cryptocurrencies before transferring it offshore, making it harder to track.

The report also highlighted a surge in fraudulent crypto investment schemes targeting Nepalese citizens through social media, where victims are promised high returns but lose their money.

The FIU identified underreporting as a key challenge in combating crypto-related fraud. Many victims, fearing legal consequences or social stigma due to the ban on crypto trading, would avoid reporting such crimes.