Although there’s a greater focus on the use of bitcoin in the financing of illegal activities, compliance professionals should not forget that “cash is king” when it comes to funding those activities, according to a panel discussion at the Association of Certified Anti-Money Laundering Specialists’ (ACAMS) financial crime forum in Toronto on Monday.
The panel spoke of the possible effect that bitcoin, a type of crypto-currency, has on funding terrorist operations and agreed that it is not a major factor at this time. The problem with bitcoin is that few vendors are willing to accept it because of its lack of liquidity, said Jillian Friedman, a lawyer who specializes in crypto-currency and financial technology at Friedman Law in Montreal.
Research indicates that the current criminal threats that may arise from bitcoin tend to be related to theft or fraud within the bitcoin network itself, she said. This could include someone trying to steal others’ bitcoins.
The panel also agreed that bitcoin’s traceability is another reason why criminals are staying away from using the crypto-currency.
“It is still the case that cash is trusted and anonymous,” said Dwayne King, an anti-money laundering training specialist and detective constable with the Toronto Police Service.
Terrorists have multiple options in transferring funds, and although bitcoin may work for larger terrorist cells, it’s less effective in getting funds to smaller groups, he said.
In addition, cash is still the dominant method in more prevalent scams that target the average Canadian, such as the “grandparent” scam in which someone claiming to be the fraud victim’s grandchild contacts the victim pleading for money in order to help the “grandchild,” King noted.
The grandparent is not going to his or her bitcoin account to transfer funds to the fraudster, said King, but is instead receiving simple instructions on how to send money through a cheque or money transfer.