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Interpol and Europol To Address Bitcoin Money Laundering

Reading Time: 2 minutes by on September 14, 2016 Bitcoin, News

Bitcoin has often been called out as one of the main sources of money laundering. So far, there has been very little evidence to back up these claims. Prevention is often better than healing, which is why Europol has established a new division, with a specific focus on bitcoin money laundering.

European Union authorities have no plans to prohibit the use of Bitcoin in Europe. However, they want to address the potential money laundering risk associated with the cryptocurrency. To do so, they created a new working group at Europol to focus on bitcoin and its role in money laundering.


Usage Of Bitcoin For Money Laundering Remains Unproven

A total of three different organizations will be in charge of the day-to-day operations, whereby Europol will collaborate with Interpol and the Basel Institute on Governance. Plans for this new venture had been laid out some time ago. After the Paris terrorist attacks in November of 2015, the European Union was toying with the idea of creating this outfit.

Regulation of Bitcoin is important to EU policymakers, but it is a lot more difficult than anticipated. For now, there is no VAT on bitcoin transactions across all of Europe. Government officials feels this facilitates money laundering through cryptocurrencies, albeit there is still no evidence to back up these claims so far.

While it is true cryptocurrency could be used to launder money, it is very difficult to do so. There is not enough liquidity across the markets, and users would have to go through exchanges to convert back to fiat currency. Since exchanges require users to adhere to KYC procedures; to criminals, it is not worth the risk.

The involvement of Interpol may indicate this task force will be expanded to non-EU member states in the future. The precise agenda remains a mystery for now, as focusing on money laundering can be done in various ways. It is expected some sort of bitcoin analysis tool will be needed moving forward. However, no specific details were provided at the time of writing.

This new outfit could force bitcoin companies to obtain specific licenses to operate in the EU moving forward. It remains to be seen what this new task force plans to do to bring alleged bitcoin money laundering to a halt. If they decide to impose something similar to BitLicense, things may not look overly positive for cryptocurrency in Europe; regulatory complexity would present another barrier to adoption and would likely weaken sentiment with regard to cryptocurrencies.

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