Title:
Cryptocurrency and Financial Risks
Author:
Avin Mohitesh Sharma
Published:
Doctoral Dissertations and projects, Liberty University, 2791 (January 2021)
Abstract:
Since its inception, the cryptocurrency's exceptional growth has put financial institutions at high risk of exposure to money laundering. In financial institutions, specifically banks, Anti-Money Laundering and Bank Secrecy Act (AML/BSA) risk specialists, bank managers, and compliance officers get challenged in identifying cryptocurrency-related transactions and customers who conceal illegal funds. Interviews conducted with the AML/BSA risk specialists, bank managers, and compliance officers were analyzed to understand how banks combat the cryptocurrency-related money laundering in the USA banking system. Interview with the Director of Financial Investigations & Education at CipherTrace as an expert in blockchain forensics was evaluated to recognize bank regulation and compliance. The case studies were assessed to understand the banks' program and regulation deficiencies and their inability to identify suspicious accounts. Interviews and case studies findings suggest that cryptocurrency-related money laundering is a risk for banks who lack proper tools, programs, and adequate well-trained and well-educated staff in mitigating cryptocurrency-related risks. Support provided by FinCEN regulation and guidance and external vendors is seen as critically valuable in assisting banks to combat cryptocurrency-related money laundering financial crimes.