By CCN.com: In recent years, government agencies across the world have vamped up their efforts to crackdown on money laundering involving cryptocurrencies like bitcoin. Yet, ...
By CCN.com: In recent years, government agencies across the world have vamped up their efforts to crackdown on money laundering involving cryptocurrencies like bitcoin.
Yet, money laundering scandals involving some of the largest banks in the world dwarf any cryptocurrency-related incidents.
On Thursday, the board of Swedbank fired Birgitte Bonnesen from her position as the CEO at the bank, recognizing the seriousness of its $151 billion money laundering case and the pressure it placed on the company.
“The developments during the past days have created an enormous pressure for the bank. Therefore, the board has decided to dismiss Birgitte Bonnesen from her position,” Swedbank chairman Lars Idermark said.
The problem with the Swedbank money laundering scandal is that it is the second multi-billion dollar case to be unraveled in the Nordic region, following Danske Bank’s $224 billion money laundering incident in November.
It is the second case of a scandal in the tune of hundreds of billions of dollars to emerge within a span of five months in the same region, raising questions on the complacency of financial regulators in dealing with major banks.
In November 2018, Reuters reported that the European Union’s banking supervisor criticized Denmark’s financial watchdog for trusting the bank too much.
“Denmark’s financial watchdog faces an inquiry by the European Union’s banking supervisor, and the Danish business minister has criticized the regulator for not being critical enough toward the bank and for trusting it too much,” a Reuters report read.
The size of money laundering scandals involving banks and bitcoin businesses is vastly different and the scale is on an unprecedented level.
Despite the lack of practicality and efficiency of bitcoin as an anonymous currency due to the presence of a public ledger which essentially enables anyone to trace transactions, many financial regulators have increasingly focused on bitcoin and digital assets to crack down on money laundering.
In mid-2018, at the G20 meeting, government officials proposed “vigilant” monitoring of cryptocurrencies.
Member countries said:
While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant. … We reiterate our March commitments related to the implementation of the FATF standards and we ask the FATF to clarify in October 2018 how its standards apply to crypto-assets.
But, the existence of blockchain analytics firms in the likes of Chainalysis and in-house transaction monitoring teams hired by exchanges already create a challenging ecosystem for criminals to move tagged funds across exchanges to liquidate.
Large-scale money laundering scandals suffered by banks year after year that exceeds $100 billion suggest that the most of the focus and resources used to crack down money laundering should be placed on large financial institutions rather than cryptocurrency businesses.
Throughout the past year, possibly due to the increase in institutionalization in the cryptocurrency space, bitcoin businesses have increasingly become more compliant with local regulations and expectations of financial authorities.
In South Korea, for instance, leading exchanges formed an association to share data on suspicious transactions, wallets, and tagged funds to immediately freeze any custodial wallet on exchanges that may be involved in criminal activities.
According to an FT report, the annual report of Swedbank read that the termination of the contract of Bonnesen would result in a compensation of 18 months worth of salary valued at $2.4 million.
Although the medium-term impact of the money laundering scandal and the scrutiny the bank may face as a result of the incident remain unclear, for now, it is being reported that the former Swedbank CEO may be dismissed from the company with a $2.4 million compensation.
It is important for both regulators and exchanges to prevent money laundering in the bitcoin and cryptocurrency space, and regulators have been successful in doing so with cooperation of businesses.