The Effectiveness of Regulatory Regimes in Combating Virtual Currencies’ Money Laundering Activities

Mémoire de Maîtrise , 2019 , 50 Pages , Note: 68% (UK) 3.88 (USA)

Droit - Droit civil / Droit commercial, Droit des sociétés, Droit des cartels, Droit des affaires

The purpose of this paper is to evaluate the existing national and international regulatory approaches in detecting and preventing money laundering activities through virtual currencies. The objective of this evaluation is to determine if these current regulatory approaches require modifications to enhance their effectiveness. The evaluation of these different approaches will also be used to determine the most suitable regulatory approach for virtual currencies that acts as an effective Anti-Money Laundering (AML) regime. As stated previously, virtual currency regulation is a developing area of law. Hence, the majority of regulations discussed in this paper has not come into effect. As a result, the evaluation on the effectiveness of these regulations is only a projection based on academic sources. The recent reform on this area also means that there is a limited number of academics that evaluated these regulations.

The development of technology in these past years has created a new financial medium known as the virtual currency market1. The use of virtual currencies has become wide-spread, due to the development of this financial market2. As a result, virtual currencies are in the process of becoming an international financial instrument that may hold significant economic value to the global financial market in the future. Regulations have only started responding to virtual currencies, due to their novelty. The instant growth of this financial instrument and its virtual element is bound to create unique regulatory challenges3. For this reason, this paper intends to study the different approaches regulating virtual currencies. These different regulatory approaches will be evaluated to ensure their effectiveness as Anti-Money Laundering (AML) regimes. Money laundering activities without the virtual element are already considered a global economic concern4. Virtual currencies have the ability of amplifying this issue, because they pose a serious threat to functioning of financial markets if they are employed in money laundering activities5. Jurisdictions only recently have comprehended the implications of this issue, which resulted in developing this new area of law that regulates virtual currencies. The emergence of virtual currency regulations provides a conducive field of study, that is relevant to the current changes undergoing the financial system.

Table of Contents

Abstract

Introduction

Chapter 1: An overview on Money Laundering and Virtual Currencies
Introduction
The definition of money laundering
The economic and social effects of money laundering
The use of virtual currencies in money laundering activities
The effect of virtual currencies on the financial system
Conclusion

Chapter 2: An Evaluation on the FATF
Introduction
An overview on the FATF
A critique on the FATF's regulatory approach
An evaluation on the FATF's enforcement mechanism
a) The process of black-listing
b) The effectiveness and the economic implications of black-listing
c) The limitations of black-listing
The FATF and the regulation of virtual currencies
An evaluation on the Virtual Assets and Virtual Asset Service Providers Guidance Paper
a) The limitations of the guidance paper
b) The advantages of the guidance paper
Conclusion

Chapter 3: An Evaluation on Different Regulatory Approaches
Introduction
The banning approach
a) An overview on the banning process
b) The effectiveness of the banning process
c) The implications of banning virtual currencies
The ‘wait and see' approach
An action-based regulatory approach
a) An evaluation on the EU's action-based regulatory approach
Conclusion

Chapter 4: Recommendations to Effectively Regulate Virtual Currencies
Introduction
The incorporation regulatory collaboration into the AML regime
a) The effectiveness of a hybrid regulatory approach
b) A solution to regulating decentralised virtual currencies
c) The effectiveness of regulatory sandboxes in enhancing the AML regime
The creation of national virtual currencies
The FATF's standards as the only viable AML regime for virtual currencies
Conclusion

Conclusion

Bibliography

• Université: Northumbria University (Northumbria University Law school)
• Cours: International Trade Laws Masters
• Note: 68% (UK) 3.88 (USA)
• Auteur: Sara Aljufaili (Auteur)
• Année de publication: 2019
• Pages: 50
• N° de catalogue: V508693
• ISBN (ebook): 9783346086747
• ISBN (Livre): 9783346086754
• Langue: anglais
• mots-clé: virtual currencies, FATF, Money Laundering, International, Bitcoins, Crypto-currencies