Switzerland’s FINMA Warns of Rising Money Laundering Risks in Crypto Industry

Switzerland's Financial Market Supervisory Authority (FINMA) has issued a stern warning about the growing threat of money laundering in the cryptocurrency industry.

The regulator’s latest report highlights the increasing use of digital assets, such as cryptocurrencies and stablecoins, for illicit purposes, including sanctions evasion.

The report points out that stablecoins are becoming a key tool in illegal financial transactions, posing significant challenges for enforcement agencies. The rise in misuse of these assets amplifies legal and reputational risks for financial institutions that lack robust risk management systems. FINMA stressed the importance of stronger safeguards to address vulnerabilities in the crypto space.

The authority’s warning underscores the substantial money laundering risks that financial intermediaries face when dealing with cryptocurrencies. FINMA cautioned that institutions without proper money laundering controls risk damaging the reputation of Switzerland’s financial sector. This advisory echoes a similar one earlier this year, which urged stablecoin issuers and banks to enforce stricter identity checks on token holders to reduce money laundering exposure.

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In response to these concerns, FINMA has introduced more stringent oversight measures, including on-site inspections and updates to audit protocols, to bolster anti-money laundering efforts. Additionally, the regulator has emphasized the need for clear risk tolerance levels and effective management practices, especially for institutions working with politically exposed individuals or high-risk clients.

Crypto organizations are also taking action to mitigate these risks. Tether, the issuer of the USDT stablecoin, along with TRON blockchain and TRM Labs, recently launched a dedicated unit focused on combating financial crimes involving stablecoins, further demonstrating the industry’s commitment to addressing these challenges.

Alexander Zdravkov