By Nermeen Nabil Khear 
Switzerland’s financial regulator, the Financial Market Supervisory Authority (FINMA), has raised concerns about the risks of using cryptocurrencies for money laundering. The regulator mentioned this in its 2024 Risk Monitor report, noting the growing adoption of crypto, particularly stablecoins, for illegal activities.
According to the regulator, Switzerland’s status as a major wealth management hub for private clients makes it vulnerable to money laundering risks, particularly high in the year under review. While it identified some risks, such as non-compliance with due diligence and reporting obligations, especially for cross-border wealth management, FINMA identified cryptocurrencies as major risk factors.
It said:
“Risks in the crypto space are becoming increasingly apparent.Cryptocurrencies are often used in cyberattacks or as a means of payment for illegal trading on the dark web.”
The regulator further noted that stablecoins have been prevalently used to evade sanctions, adding that financial intermediaries offering crypto-related services are at the most risk. Thus, it called on such financial institutions to adequately manage money laundering risks, which can damage the country’s reputation.
Crypto assets are coming under increasing regulatory scrutiny
While the report focuses broadly on various money laundering risks, mentioning crypto and stablecoins is not accidental. The regulator had published new guidelines on stablecoin risks earlier in the year, requiring issuers to confirm token holders’ and beneficial owners’ identities.
The focus on crypto firms is not peculiar to Switzerland. Regulators in other countries have also flagged cryptocurrencies and stablecoins as vulnerable to money laundering. In Nigeria, authorities have alleged that crypto exchanges, particularly Binance, enable money laundering. The UK Financial Conduct Authority also identified virtual assets firms as vulnerable to money laundering violations.
There are also reports that stablecoin issuer Tether is under investigation by the US Department of Justice (DOJ) for violating anti-money laundering regulations through the USDT stablecoins. However, the company denied this with the CEO Paolo Ardoino, noting that it is an active collaborator with law enforcement globally and would be aware if it is under investigation by the US DOJ.
So far, authorities globally appear to be making concerted efforts to regulate the use of stablecoins. In Europe, the Market in Crypto Assets (MiCA) law provides specific regulations for stablecoins, which multiple exchanges are now trying to comply with as the rules will become effective by the end of the year.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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