City regulator taps into Bitcoin expertise as terrorists mine cryptocurrencies
The city’s regulator is using Bitcoin experts to train its staff, fearing that money launderers and terrorists using cryptocurrencies may have a head start in the fight against financial crime.
The Financial Conduct Authority (FCA) is spending £ 500,000 on consultants to provide access to a platform that analyzes blockchain data and to coach officials on how they can spot criminals who transfer money through decentralized financial networks.
The FCA is stepping up its oversight of crypto transactions as part of its efforts to combat money laundering and terrorist financing over fears that the crypto industry is becoming a hotbed of financial crime.
Concerns about the rise in cryptocurrency-related crime have escalated in the UK over fears that the technology is illegal and extremely high risk. Police forces across Britain have seized hundreds of millions of pounds of money laundering-related cryptocurrency this year.
The financial regulator has issued a series of warnings in recent months over the speculative nature of crypto assets, saying consumers should be prepared to lose all of their money.
However, the FCA has been slow to deal with the growing number of crypto-asset firms operating in the UK.
The watchdog was supposed to ban cryptocurrency businesses that were not on its official ledger under anti-money laundering regulations from January, but having only dealt with four businesses as of that date, it said. ended up placing others on a temporary register until July.
In June, it again pushed back the deadline for its so-called temporary registration regime to March 2022 with only five officially registered companies. He warned that more than 50 companies operating in the cryptocurrency arena could be forced to shut down after failing to comply with UK anti-money laundering rules.
Terrorist organizations are also increasingly using cryptocurrencies to quietly channel assets to fund their operations. In January, the FCA was given powers to oversee the fight against money laundering and terrorist financing under new regulations.
Extremists use digital coins to trade items like weapons and drugs on the black market and even set up effective crowdfunding sites on the dark web where supporters can donate. For example, “Fund the Islamic Struggle Without Leaving a Race” is a dark web page used to transfer bitcoins to jihadists.
Some extremists have even published books that teach their followers how to transfer Bitcoins from Western countries to jihadists.
Regulators have struggled to bring crypto markets under control as digital currencies gain popularity. In August, the city watchdog admitted it was “unable” to regulate the Binance crypto exchange after refusing to provide basic information on its operations.