Exploring the links between AML, digital currencies and blockchain technology
| DOI | https://doi.org/10.1108/JMLC-11-2015-0050 |
| Published date | 02 July 2019 |
| Pages | 515-526 |
| Date | 02 July 2019 |
| Author | Mohammed Ahmad Naheem |
| Subject Matter | Financial risk/company failure,Financial compliance/regulation,Financial crime |
Exploring the links between
AML, digital currencies and
blockchain technology
Mohammed Ahmad Naheem
Mayfair Compliance, Frankfurt, Germany
Abstract
Purpose –This paper aims to explore the implications of the 2014 Financial Action Task Force (FATF)
publication and guidelineson virtual currency definitions and the overall impact of blockchaintechnology on
anti-money laundering(AML) compliance and regulation. The report cites three case study examples, which
the FATF paper uses and which this paper questionsas to their relevance, especially to the formal banking
sector.
Design/methodology/approach –The paper has provided a critical analysis of a FATF publication
and guideline document. Additionalsecondary data has been used on blockchain technology and to analyse
the relevanceand implications of the case studies used in the FATF document.
Findings –The main findings are that virtual currency technology has the potential to support AML
frameworks within banking when and if they are better understood. However, generic case examples of
virtual currency legal cases are not necessarily usefulwhen developing AML risk assessment frameworks
within the bankingsector.
Practical implications –The implications from the research affect any financial organisation
undertaking AML risk analysis or compliance especially for virtual currencies. It applies to the banking,
insuranceand auditing professions and is of interest to academics working on virtualand digital currencies.
Social implications –The social implications are that virtual currency technology can be used to add
protection to banking transactions and could also be considered for client identity information such as
beneficialownership.
Originality/value –The originalityof this paper is the topic of blockchain technology being consideredin
AML frameworksand the critical analysis of the FATF cases.
Keywords Anti-money laundering, Virtual currency, Beneficial ownership, Digital currency,
Risk-based assessment
Paper type Case study
The author acknowledges being the recipient of a research grant awarded by Princess Ālae as part of
Seven Foundation’s“2020 Banking Vision –building banks of the future”and he thanks her for the
continued support and motivation both to himself and other students who benefit through her
generosity.
Please note that this paper was composed and submitted for review to this journal in November
2015. All the content was current at that point in time (November 2015). The crypto currency
industry, governmental policy-making, alongside the banking and regulation industries have evolved
greatly since then, with new material from academic research emerging. These points need to be
taken into consideration when reading this paper. This current paper is part of a series of papers that
explore the implications and future use of blockchain and virtual currency technologies within the
financial services sector.
The author is a specialist researcher and practitioner in the fields of Trade-Based Money
Laundering and Crypto Currencies contracted to Mayfair Compliance. (www.mayfaircompliance.
com).
AML, digital
currencies and
blockchain
technology
515
Journalof Money Laundering
Control
Vol.22 No. 3, 2019
pp. 515-526
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-11-2015-0050
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
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