Tom Griffiths, Director at Lysis Group & Crypto Money Laundering Reporting Officer
1. Could you explain the concept of money laundering in simple terms?
In simple terms, money laundering is legitimizing money obtained by criminal means.
2. What is the biggest challenge in this sector?
I cannot define one thing as the biggest challenge. Like every industry, anti-money laundering has many challenges. I can say three major for that. These are;
• Criminals are continually evolving their methods
• Difficulty in implementing new technology.
• Firms are having to control budget/spend on financial crime compliance.
3. How can AML or KYC or KYB benefit from the blockchain technology?
DLT technology records every single transaction associated with a token. This makes transaction monitoring practically perfect in regards to crypto assets as the technology can identify where a coin has gone through a tumbler or mixing service in an attempt anonymise a transaction.
4. How can governments stop money laundering? What do you think, can they?
Even closer collaboration and crossboarder partnerships.
5. If everything went to digital money and cash was no longer accepted, how will it change the AML process?
It would be more difficult for criminals to launder illicit funds/assets, but they will, and have already, found a way.
The AML process is unlikely to change, but the technology used would. E.g. Across the UK/EU, the same money laundering regulations apply to fiat and digital/crypto assets.
6. Why is money laundering bad for the economy? What is the worst effect?
Money laundering creates injustice in the economy. In my opinion, the worst effect is the loss in tax revenue. Tax revenue creates a fair economy for society. Money laundering destroys this.
7. What are the risks and benefits of cryptocurrency in the AML?
Cryptoassets change the sector a lot. The risk of the Cryptoasset is the ownership of the asset may be more difficult to ascertain. Moreover, the benefit of the Cryptoassets is the token's movement will be recorded through every single transaction.
8. What is the essential qualification of an anti-money laundering officer?
There are some skills that anti-money laundering officers should have. I think the essential qualification is "Diligence" and the ability to collaborate.
9. How has anti-money laundering changed over time?
I started in the industry in 2003 when AML was a dirty word in banking. It is now at the forefront of the board of every regulated institution. Additionally, the size and breath of the regulated industries has increased a lot.
10. Have you any recommendations to fintech startups about the AML process?
• Focus on the detail.
• Do not run away with technology.
• Do not see compliance as a second ary thought.
• The two must be designed, built, and embedded hand in hand.
11. If you trade with bitcoins, how do you manage to "explain" anti-laundering authorities the money-in & money-out?
Turning crypto/virtual assets into fiat currency must be subject to standard AML/KYC checks, including the source of funds (i.e., where the token has been and where it is going).
All profit must be declared to the authorities so the correct level of tax can be paid.