The Royal United Services Institute (RUSI), an independent think tank for international defence and security issues, says cloud-mining companies that take cash for crypto may be helping crooks hide their illicit gains.
In the report, titled ‘From Intention to Action: Next Steps in Preventing Criminal Abuse of Cryptocurrency’, authors Anton Moiseienko and Kayla Izenman write: “Cloud-mining companies that accept fiat currency and distribute cryptocurrency in effect enable their users to exchange fiat for crypto, which can lead to the conversion of criminally obtained fiat currency.
“Furthermore, a Chainalysis webinar suggests that some mining pools allow users to make and then receive fiat payments, which provides money laundering opportunities.
“In those cases, a question may arise as to whether such a company is a financial institution for AML/CTF (anti-money laundering and counterterrorist financing) purposes regardless of whether it falls within the definition of a VASP (virtual asset service provider).”
If you've spoken to me at all in the last 7 months you'll know this paper was my baby… and it's finally published! Please check it out and let me know your thoughts 🤩 https://t.co/PMNDJsWI2m
— Kayla Izenman (@KaylaIzenman) April 15, 2019
Furthermore, it states cloud-mining companies are not subject to AML/CTF regulation because their distribution of virtual currency is “integral to the provision of [mining] services”.
It recommends that financial watchdogs should consider keeping their approach to AML/CTF regulation of cloud-mining companies under review at all times.
“Our current system is doing a pretty terrible job of it – 99.9% of all money laundering crimes go unprosecuted,” she said.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.