Money laundering via cryptocurrencies – potential solutions from Liechtenstein
| Date | 06 June 2020 |
| DOI | https://doi.org/10.1108/JMLC-04-2020-0041 |
| Pages | 91-101 |
| Published date | 06 June 2020 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Fabian Maximilian Johannes Teichmann,Marie-Christin Falker |
Money laundering via
cryptocurrencies –potential
solutions from Liechtenstein
Fabian Maximilian Johannes Teichmann and Marie-Christin Falker
Teichmann International (Schweiz) AG, St. Gallen, Switzerland
Abstract
Purpose –The purposeof this paper is to demonstrate how cryptocurrenciesare used to launder money and
how solutionsfrom Liechtenstein’s novel blockchain legislationcould be used to tackle the issue.
Design/methodology/approach –Within the scope of the literature review, the characteristics of
cryptocurrencies and how these characteristics facilitate money laundering are discussed. To investigate
concrete methodsthat money launderers use, a qualitative study with 10 presumed moneylaunderers and 18
prevention expertswas conducted. The results were subsequently testedquantitatively. Thereafter, the novel
Liechtenstein blockchain act is discussed and it is detailed how the legislation could contribute to the
establishmentof an international standard in blockchainregulation.
Findings –Money launderers continue to abuse cryptocurrencies such as Bitcoin as vehicles for financial
crime. The LiechtensteinBlockchain Act could serve as a benchmarkfor regulators around the world aiming
to solve the issue.
Research limitations/implications –Current anti-money launderingregulations are rather ineffective
when it comes to cryptocurrencies.
Practical implications –The findings of this paper illustrate that new and innovative means for
combatingmoney laundering are needed. In particular,this paper provides insights into cryptocurrencycrime
and Liechtenstein’sresponse for legislators, law enforcement,compliance officers and regulatory authorities.
Originality/value –Liechtenstein’s blockchainact, as a potential remedy to money laundering, has thus
far not received internationalattention.
Keywords Blockchain, Tokens, Bitcoin, Cryptocurrency, Money laundering, Due diligence,
Liechtenstein Blockchain Act, TVTG, Compliance, TT services
Paper type Research paper
1. Introduction
Blockchain technologyis on the rise, and businesses and private usersalike are using it for a
variety of purposes. Whereas businesses often use blockchain to optimize data storage and
sharing, for private users, its most popular application is probably cryptocurrency. Ever
since the first cryptocurrency, Bitcoin, was invented in 2008, compliance experts have
criticized its role in allegedly facilitating criminal activity. In particular, it is frequently
argued that cryptocurrencies are used for illicit online purchases, to finance terrorism or
money laundering. This criticism is rooted in the fact that even though the blockchain
serves as a permanent public ledger, it cannot be effectively regulated. Although some
jurisdictions, in particularthe European Union (EU), have recently implemented regulations
pertaining to cryptocurrency, the topic continues to be a legal gray area, thus offering
manifold possibilities for criminals. In an effort to reduce uncertainty around not only
cryptocurrency but also blockchain as a whole, Liechtenstein implemented the world’sfirst
comprehensive blockchain legislation in January 2020, which regulates all possible
applications of blockchaintechnology.
Money
laundering via
cryptocurrencies
91
Received23 April 2020
Revised10 May 2020
Accepted10 May 2020
Journalof Money Laundering
Control
Vol.24 No. 1, 2021
pp. 91-101
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-04-2020-0041
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