Golden Finance reported that according to Bloomberg, the German Financial Intelligence Agency (FIU) said in Cologne on Tuesday that the proportion of digital assets in suspicious activity reports (SARs) received from banks and financial services companies last year set a record. Although the total number of suspicious activity reports decreased after the industry received guidance to insist on submitting relevant reports, notifications related to cryptocurrencies still increased by 8.2% to 8,711.
The FIU annual report shows that the majority of the reports involve BTC, followed by ETH, XRP, USDT and LTC. The institution pointed out that these tokens are often associated with transactions related to trading platforms, coin mixing services or gambling.
Germany has long held a unique position in the field of cryptocurrencies. As early as 2013, the German Ministry of Finance began to pay attention to the development of cryptocurrencies and issued relevant policy documents, becoming the first country in the world to officially recognize the legality of transactions of cryptocurrencies such as Bitcoin. The number of Bitcoin and Ethereum nodes is second only to that of the United States. The German government also encourages banks and financial institutions to actively participate in the development of cryptocurrencies, and has formulated a relatively friendly tax system. It defines cryptocurrencies as special products with dual attributes of currency and property, and holding, trading and using cryptocurrencies are legal behaviors.
In terms of regulation, Germany has implemented the Fifth EU Anti-Money Laundering Directive (AMLD5), requiring cryptocurrency exchanges and wallet providers to comply with strict AML/CTF regulations. In 2022, the German Federal Ministry of Finance released the first national cryptocurrency tax guideline, further improving the regulatory framework for cryptocurrencies. However, according to the data released by FIU this time, despite the continuous strengthening of regulation, the proportion of cryptocurrencies in suspicious activities is on the rise.
Based on the comparison of past data, there were approximately 570 suspected cases of cryptocurrency money laundering in 2018. By 2020, this figure had almost quadrupled to about 2,050 cases. Nowadays, the number of reports of suspicious activities related to cryptocurrencies continues to grow. This might be due to the fact that as the cryptocurrency market continues to develop, its transaction scale and the number of participants have increased significantly, and more lawbreakers are attempting to take advantage of the anonymity and cross-border transaction convenience of cryptocurrencies to carry out illegal activities.
Take the coin mixing service as an example. It aims to blur the transaction path of cryptocurrencies, making it difficult to track the source and destination of funds. This provides convenience for activities such as money laundering and illegal fund transfer. If cryptocurrency trading platforms are not properly regulated, they can also be exploited by lawbreakers and become channels for the circulation of illegal funds. In the field of gambling, the use of cryptocurrencies has made gambling transactions more covert and increased the possibility of evading regulation.
For the German financial market, the increase in the proportion of suspicious cryptocurrency activities may pose a potential threat to the stability of the financial system. On the one hand, if a large amount of illegal funds flow into the financial market through cryptocurrency channels, it may disrupt the normal financial order and affect the fairness and transparency of the market. On the other hand, this may also lead to a setback in investors’ confidence in the financial market and hinder financial innovation and healthy development.
German financial intelligence agencies may further enhance their monitoring and analysis of cryptocurrency transactions in the future, and strengthen cooperation with regulatory authorities in other countries to jointly combat cross-border cryptocurrency criminal activities. At the same time, it may also promote the improvement of relevant legislation and raise regulatory standards for the cryptocurrency industry to reduce the risks of cryptocurrencies in suspicious activities.
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