The report provides law enforcement examples a number of examples of money laundering offences involving virtual currencies to demonstrate how this payment method has already been abused for money laundering purposes.
- the anonymity provided by the trade in virtual currencies on the internet
- the limited identification and verification of participants
- the lack of clarity regarding the responsibility for AML/CFT compliance, supervision and enforcement for these transactions that are segmented across several countries
- the lack of a central oversight body.
Specifically, the paper report a common definitional vocabulary that clarifies what virtual currency is and classifies the various types of virtual currency, based on their different business models and methods of operation, and identifies the participants in typical virtual currency systems. It also applies risk factors set forth in Section IV (A) of the 2013 NPPS Guidance to specific types of virtual currencies to identify potential risks; describes some recent investigations and enforcement efforts involving virtual currency; and presents a sample of jurisdictions' current regulatory approaches to virtual currency.