The following article has been inspired by a first article published by the World Economic Forum in December 2017. The entire article can be found here : https://www.weforum.org/agenda/2017/12/how-to-civilize-the-dark-web-economy-bef5311f-704d-467b-b005-6aa80a40f46b.
The World Economic Forum estimates that the cost to the global economy due to cybercrime is roughly $445 billion a year.
According to a recent FBI statistic, “three in four money laundering cases involve digital currencies.”
The opportunity raised by crypto-currencies and the assurance of keeping the anonymity of fund transfers obviously attract crime organisations. One of the major issues of those new virtual currencies is that most of them refuse to know their customers or freeze accounts of those engaged in criminal conspiracies.
But as the World Economic Forum underlines " Fintech firms themselves present significant ‘operational risks,’ lacking the incentive for proper intrusion detection or Know Your Customer /Anti-Money Laundering protocols. Given that 50% of all crimes now have a cyber component, it is high time that we follow the money to create an international e-forfeiture fund. The modern epidemic of cybercrime and cyberespionage can also be mitigated through modernization of existing authorities to empower the Financial Action Task Force (FATF), the Financial Crimes Enforcement Network (FinCEN), and the Treasury Forfeiture Fund (TFF) to combat cyber-money laundering."
Now, let's step back a bit :
- Trust towards Financial institutions and governmental institutions has largement eroded since the 2008 Financial Crisis
- Several (if not all) recognised Financial brands have been hacked and their customer information stole and sold on the dark web
- Traditional Financial institutions are not keeping pace with disruptive change and innovation as much as digital banks and are less agile towards change
- Blockchain technology like many disruptive technologies brings tremendous opportunities and risks.
- The Financial Industry, under a lot of pressure and new competition, may not always be objective towards new solutions but among them, the smartest are already investing into the blockchain.
Time will tell how all of this evolves, but at the end of the day,
- Financial Institutions definitively need to re-establish customer trust, invest in AML/KYC risk models, strong innovation and cybersecurity frameworks.
- International bodies need to work with disruptive fintech of the blockchain technology to fight against crime while keeping the model viability
- Various solutions of AML platforms already exist : Thomson Reuters offers a cloud-based AML solution, others are using ACL or SQL based data analysis engines and new actors like the Coinfirm startup that provides a blockchain AML risk and compliance platform could very well be the new players of tomorrow.