Business & Finance

Regulate Crypto Miners to Minimize Human Trafficking

Recently, the vice president of Financial Integrity Network (FIN), David Murray, confirmed that cryptocurrencies such as bitcoin, ware utilized for human trafficking. After revealing that $150.2 billion annual profit was generated in 2014, Murray concluded that human trafficking was highly profitable and regulating crypto miners will be extremely helpful to minimize human trafficking.

He elaborated that at lower level of organizations, human traffickers have been using cryptocurrencies and online payment systems and said:

At lower levels of human trafficking organizations, human traffickers have used cash, retail payment systems, online payment systems, and cryptocurrencies. At higher levels of human trafficking organizations, human traffickers have exploited anonymous companies to conceal their activities.

According to the vice president, lack of transparency favored human traffickers to easily penetrate through the financial system and make money. That’s why anonymity provided by cryptocurrencies and several other online payment services was very desirable among the traffickers. By using cryptos, bad actors have been quite successful in concealing their activities.

In addition to that, rapid and immutable settlements executed through cryptocurrencies have made them ideal for illicit activities. Apart from speedy transactions, the decentralized nature of cryptos was also discussed. It was clarified that decentralized virtual currencies didn’t have any control or central body. This meant that most transactions encompassing cryptos went completely ungoverned and unsupervised.

READ ALSO: Vlad Zamfir’s Startup Raised $14.5 Million for Blockchain Scalability

Murray also revealed that while traffickers used crypto payments for advertisements and websites, beneficiaries used cryptocurrencies to pay for premium memberships and services. To combat trafficking, he suggested banning anonymous companies, strengthening crypto regulations and decreasing transparency to disrupt human traffickers and their operations. Emphasizing on the creation of crimes compliance, Murray said:

The lack of system-wide financial crimes compliance (FCC) governance for some existing cryptocurrencies allows criminals space to operate and makes it difficult for the United States to isolate rogue service providers from the U.S. financial system.

Particularly regarding cryptos, Murray urged Congress to regulate crypto and blockchain firms in the cryptocurrency sector under the Bank Secrecy Act (BSA). He proposed all virtual asset service providers (VASPs) to be covered and guided by the BSA.

Murray presented his view that authorities should be powerful enough to limit the exposure of VASPs. By doing so, he claimed that VASPs could be prevented from entering the U.S. financial system and performing illegal practices.

READ ALSO: Smack That US Dollar! Hip-Hop Singer Akon is All Praise for Bitcoin

At the moment, virtual asset exchanges are regulated as money services businesses (MSBs), under BSA. The main task of these exchangers is to convert fiat currency to virtual assets. As per rules defined by BSA, virtual asset exchangers are required to follow anti-money laundering (AML) protocols. To conduct customer due diligence (CDD), these exchangers need to establish risk-based customer identification programs as well. Under the BSA, similar instructions were also prescribed for virtual asset issuers.

Additionally, it was disclosed that virtual asset transaction validators were not dealt by BSA. So, there were no rules and regulations for these validators, known as miners. However, Murray urged to include validators under BSA in the near future.

Like validators, wallets are not currently under BSA either. According to Murray, there must be border declaration requirements for wallets. However, he commented that wallet will remain attractive to people indulged in illicit activities even if the aforementioned safeguards were implemented.

READ ALSO: This Bitcoin Millionaire Nearly Kissed Death by His Crypto Wealth Boasting

After suggesting regulations, Murray described the problems that would arise for the existing blockchain-based companies. He anticipated that existing companies might not be able to operate like they used to. He comprehensively explained:

Imposing regulations on people and entities who perform these functions almost certainly would make it difficult for some existing implementations of blockchainbased payments to continue operating as they do today. But it is not the purpose of the BSA or the global financial transparency regime to enable or accommodate all manner of financial products and services, regardless of the threat that they pose to financial transparency. Indeed, some financial products services have been deemed so risky that they have been banned.

The vice president of FIN showed his concerns and understanding regarding human trafficking activities. Although he shared thoughts and predicted some of the outcomes of regulations under BSA, U.S. Congress is not bound to follow his suggestions. Next steps to be taken by authorities while introducing crypto and blockchain regulations will decide how much useful Murray’s suggestions were.

READ ALSO: Crypto Review: Ripple and Libra, Two Sides of the Same Coin?

Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at editor.opinions@blockpublisher.com

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.