One of the main issues to be tabled at the G-20 Financial Ministers and Central Governors Meeting that is holding this weekend is cryptocurrency and money laundering.
“What kind of agreement would be a surprise? Even for the purpose of introducing Anti-Money Laundering (AML), should we allow our financial privacy to be compromised?” these were the questions asked by the CEO of Beam, Alexander Zaidelson when he was talking with Cointelegraph.
A New Agreement On Cryptocurrency And AML?
One of the top Japanese publications, Jiji Press, just reported that there will be some sort of agreement as regards to AML/CFT and cryptocurrency.
Chainalysis, a blockchain analysis firm, which has directly engaged with regulators worldwide noted that;
“It is surprising if they agree on something new,” said by the head of policy at Chainalysis Jesse Spiro. He also expects a Financial Action Task Force (FATF) guidance, which should be released during the month, This would show the draft guidance that was released in March 2019.
“It would surprise us if FATF substantially modified the pre-existing draft in any major substantive way.”
The FATF draft was summarized as an pact within the industry that
“some standards, as well as the appropriate Know Your Customer (KYC), transaction monitoring, enhanced due diligence (EDD), and reporting of any suspicious activity is essential to fight money laundering”
The Financial Action Task Force (FATF) is an inter governmental body created to combat money laundering and fight terrorism financing by nefarious individuals. In a preceding G-20 meeting, they said that they’d
“commit to implement the FATF standards as they apply to crypto-assets.”
An approved self-regulatory firm in the host country monitors the G-20 closely.
Japan’s Virtual Currency Exchange Association (JVCEA) held back from guessing the outcome of the G-20 summit but they told Cointelegraph that whatever the outcome of the summit is, they would readily comply.
“We are watching global movements as to AML/CFT very closely. We supervise our members, Japanese crypto exchanges to make sure that they comply with them.”
According to the CEO of a privacy centered coin, Beam, Alexander Zaidelson, he said that the governments
“may eventually strengthen the regulatory scrutiny to on- and off-ramps, i.e. places where cryptocurrency can be converted into Fiat currency, mostly exchanges”
Zaidelson also added that there could be a clampdown on unregulated exchanges.
Beam is reputed for being a privacy coin that uses a protocol called MimbleWimble. This protocol seeks to advance both scalability and privacy all at once. When he was asked if he’s disturbed that the G-20 could ban anonymous and privacy coins, Zaidelson replied:
“I don’t think it is possible to ban anonymous coins, and the regulators understand it.”
He continued further:
“I think that a balance should be found between privacy and compliance, where people can choose the level of compliance that works for them. It is similar to how cash works today – private people do not need to report cash transactions, but businesses do.”
Even though there’s a possibility that regulators could make it really hard to change fully anonymous tokens/coins to fiat, Zaidelson maintains that opt-in compliance in privacy coins can take care of that.
Privacy, Money laundering, and Public Interest
“I think that privacy is a basic human right,” said Zaidelson.
He believes it’s something never to forget when discussing the subject of money laundering. To him, it is not a good thing if the regulators have all financial transactions at their beck and call for review at any time.
“It is not possible to check every PC and every mobile phone for the presence of a crypto wallet. It is not possible to block the Internet. Instead of engaging in a futile fight against anonymous cryptocurrency, the regulators should work together with the developers and find ways to make them a part of the existing ecosystem.”
Spiro from Chainalysis believes there should be a balance between privacy and money laundering in terms of “safety and public interest.” He said:
“For example, the European GDPR laws, which were enacted to protect privacy, have clear rules that outline when the transmission of personal data warranted, including if it is ‘in the public interest,’ or necessary to protect the public.”
Spiro believes that a such too could be applicable to cryptocurrencies in general. He sees the advantages of
“cryptocurrency compliance best practices like KYC and blockchain analysis” in “detecting and preventing illicit activities such as child exploitation, human trafficking, narcotics trafficking, and terrorism.”
At the same time, Spiro ensures that Chainalysis doesn’t keep any personally identifiable data from exchanges. What they do as an alternative is to know
“a particular address belongs to a customer at that exchange, not who the customer is”
It is advisable to follow up on what the agreements that G-20 summit which is holding this weekend would come up with and what this could mean for the balance between money and laundering privacy.