Securities Times reporter Li Yingchao

  The continuous advancement of science and technology has also given birth to new forms of financial assets that are still receiving mixed reviews.

Among them, digital assets such as virtual currency represented by Bitcoin have been controversial since their inception.

In the uninterrupted game of profit-seeking in the capital market, virtual assets such as cryptocurrencies are gradually being abused for illegal and criminal activities such as money laundering, which makes the supervision of various countries have to be strict.

  On February 8, the U.S. Department of Justice announced that it had seized more than 94,000 bitcoins stolen five years ago and arrested two suspects on suspicion of money laundering.

It is reported that the cryptocurrency confiscated from the suspect is worth about 3.6 billion US dollars (equivalent to about 23 billion yuan), which is the largest financial seizure in history.

  According to a report by blockchain data analysis company Chainalysis, in 2021, the amount of money laundered by cybercriminals through cryptocurrencies will reach $8.6 billion, an increase of 30% from 2020. About 17% of the crime amount comes from decentralized financial applications, namely Applications that support cryptocurrency-denominated transactions outside of traditional banks.

  A risk control person from a multinational payment institution told the Securities Times reporter that anti-money laundering requirements have always been strict, both from the company's own point of view and from the regulatory requirements. In fact, the supervision has always been relatively strict.” The person said that from the perspective of the institution where he works, the annual supervision requirements are not very different, but he can clearly feel that he is trying his best to be in line with international standards.

  Money Laundering Targets Digital Artwork

  Recently, a report released by blockchain data analysis company Chainalysis shows that there is a gradual increase in money laundering through NFTs (non-fungible tokens).

"Although there is only a small part of money laundering in the current NFT market, its proportion is increasing." Some analysts pointed out.

  In the past period of time, NFTs have become a hot investment concept.

NFT, the full English name of Non-Fungible Token, is a non-fungible token, which is a digital asset (including pictures, video clips, etc.) verified by blockchain technology.

In reality, NFTs are mostly known to investors in the form of "digital artwork".

  On March 11, 2021, artist Beeple's NFT artwork "Everydays: The First 5000 Days" was finally sold at the traditional auction house Christie's for US$69.34 million (approximately RMB 450 million).

On March 18, 2021, some media reported that Elon Musk’s tweets, including accompanying texts, clips and songs, were packaged into NFTs for sale, and the highest bid was as high as $1.12 million.

  Not only that, many domestic Internet giants have also participated in this market, and successively announced the launch of related NFT projects. For example, Tencent entered the field of NFT digital goods with the "Magic Core" APP; Ali provided payment code NFT skins with "Ant Chain Fan Particles". and digital artwork.

  "Because of the high transparency of the blockchain, the information of artworks is completely open." Someone in the NFT field said that digital artwork transactions can not only see both parties of the transaction, but also the development history of the artwork itself can be traced.

It is with these characteristics that NFT transactions are easier to quantify than money laundering in the physical art market.

  But evidence of money laundering transactions in the NFT market has been discovered by international agencies.

The Chainalysis report shows that in March of last year, cryptocurrencies sent to the NFT market through illegal addresses jumped sharply, exceeding $1 million; in the fourth quarter of that year, it further increased to nearly $1.4 million.

  "In the third and fourth quarters of last year, the vast majority of this type of money laundering came from scam-related addresses that sent funds to the NFT market for purchases." Chainalysis said that the potential for NFT to be abused, markets, Regulators and law enforcement should monitor this more closely.

  Some analysts pointed out to the Securities Times reporter that it is too difficult to supervise transactions at the level of virtual assets. Many countries, including my country, do not recognize this transaction method, and the transaction of virtual currency is prohibited by local laws.

"The country has also requested that various financial institutions stop providing accounts and other services for virtual currency transactions. Later, the National Development and Reform Commission joined forces with multiple departments to rectify activities such as virtual currency mining," the person said.

  "Money laundering", especially transfers from sanctioned cryptocurrency businesses, has created a huge risk to the market trust of NFTs themselves.

  Cryptocurrency money laundering hits record

  As online transactions become more common, financial institutions and even regulators have to be wary of the growing risks of illegal transactions, especially the money laundering risks caused by cryptocurrencies such as Bitcoin.

  Zhou Maohua, an analyst at the Financial Market Department of China Everbright Bank, told the Securities Times reporter that in general, money laundering methods are relatively concealed, and the innovation and development of financial services, the application of virtual currency, money laundering and terrorist financing are difficult to manage.

  "Since 2017, cybercriminals have accumulated more than $33 billion in money laundering through cryptocurrencies." The report also from Chainalysis shows that in 2021, the amount of money laundered by cybercriminals through cryptocurrencies will reach $8.6 billion, an increase of 30% from 2020. %, of which about 17% of the crime amount came from decentralized finance applications, i.e. applications outside of traditional banks that support cryptocurrency-denominated transactions.

  According to researchers, more and more cybercriminals have been found recently to steal cryptocurrency from individual users through malware, and this part of the funds will be transferred to decentralized financial platforms.

This malware-based cybercrime is as easy as stealing personal information, but more complex on a scale.

  It is understood that common cryptocurrency-related malware families can be divided into information stealers, Clippers (clip tools), Cryptojackers (cryptocurrency mining) and Trojans.

The specific data shows that a total of 5,974 transactions were made by victims passively to malware-controlled cryptocurrency addresses in 2021, up from 5,449 in 2020, while more than half (55%) of all cryptocurrency sent from illicit addresses went to 270 service deposit addresses.

  Previously, foreign criminals used phishing to defraud 400 million won, and then exchanged the stolen money for cryptocurrencies.

After several high-priced transactions in a relatively short period of time, the above-mentioned funds were transferred to an international virtual wallet, and these stolen funds were transferred nearly 50 times during the entire process to hide their identities as much as possible.

  In the criminal crackdown on the use of cryptocurrencies for money laundering, the power of law enforcement is unquestionable, such as through monitoring, disrupting abnormal transaction behaviors, etc. to prevent criminals from accessing such digital assets.

This is reminiscent of the current digital renminbi officially implemented in my country. In fact, the digital renminbi also focuses on the role of digital currency in supervision and privacy protection in the research and development process.

  "The digital renminbi is controllable and anonymous, that is, it is anonymous in the process of transaction and circulation, but the final transaction flow and capital chain can be opened only to the central bank, which not only reduces the dependence on financial intermediaries in the transaction process, but also greatly protects the User privacy also helps to precisely combat money laundering, terrorist financing, tax evasion and other illegal and criminal acts." An industry insider pointed out.

  Anti-money laundering supervision

  Entering 2022, the regulatory system has shown a strong attitude towards the arrangement and deployment of anti-money laundering work in the first month. Whether it is the punishment of violating financial institutions or the introduction of relevant regulations, the market has paid attention to it.

  A risk control person from a multinational payment institution told the Securities Times reporter that anti-money laundering requirements have always been strict, both from the company's own point of view and from the regulatory requirements. In fact, the supervision has always been relatively strict.” The person said that from the perspective of the institution where he works, the annual supervision requirements are not very different, but he can clearly feel that he is trying his best to be in line with international standards.

  "As my country accelerates the construction of a high-level opening to the outside world, domestic anti-money laundering norms also need to be linked with internationally accepted standards." Zhou Maohua also mentioned.

  Before the Spring Festival, the central bank, the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission jointly issued the "Administrative Measures for Financial Institutions' Customer Due Diligence and the Preservation of Customer Identity Information and Transaction Records", which required various types of financial services - personal deposits and withdrawals in the course of business should be within 50,000 yuan. Users with more than RMB can register, etc.

  At the same time, the Hangzhou Central Sub-branch of the Central Bank also disclosed a penalty of up to 22.365 million yuan against MYbank.

Not only MYbank, but Guangzhou Rural Commercial Bank and Bank of Kunlun were also fined 5.9 million yuan and 2.69 million yuan respectively for their violations of anti-money laundering laws and regulations such as failing to perform customer identification obligations as required.

  In recent years, the supervisory authorities have not slackened their efforts to seriously carry out anti-money laundering law enforcement inspections.

According to the "China Anti-Money Laundering Report 2020" released by the central bank at the end of December last year, in 2020, the central bank carried out anti-money laundering law enforcement inspections on 614 obligated institutions, 87% of which were legal entities, and punished 537 anti-money laundering violations in accordance with the law. The amount of fines was 526 million yuan; 1,000 individuals who violated the rules were punished, and the amount of fines was 24.68 million yuan. The total amount of anti-money laundering supervision penalties increased significantly compared with previous years.

  The central bank reported that during the same period, the attention and supervision of the follow-up rectification work of the institutions under investigation were highlighted, and a total of 917 "look back" visits were organized throughout the system to promote voluntary institutions to earnestly implement rectification measures.

The head office completed the anti-money laundering annual classification rating of 26 legal entities and the money laundering risk assessment report of 3 large banks, and issued 29 regulatory opinions to guide relevant institutions to further improve their anti-money laundering work.

  On January 26, 2022, 11 departments including the Central Bank, the Ministry of Public Security, the State Supervision Commission, the Supreme People's Court, the Supreme People's Procuratorate, the Ministry of State Security, the General Administration of Customs, the State Administration of Taxation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the The Three-Year Action Plan for Combating and Governing Money Laundering Crimes (2022-2024), decides to carry out a three-year action nationwide from January 2022 to December 2024 to combat and control money laundering crimes in order to combat and control money laundering crimes in accordance with the law. , and further improve the risk prevention and control system for money laundering crimes.

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