Those unfamiliar with the world of digital currency like to say cryptocurrencies are used for illegal purchases and by terrorists, but this couldn’t be further from the truth. In fact, the DEA recently came out and said that it hopes more criminals start using cryptos due to the fact it can trace every transaction – even with the most private cryptos out there. Echoing these facts was Yaya Fanusie – Director of Analysis for the Foundation for Defense of Democracies – in a speech given to a number of US house representatives. While he did admit that terrorist groups are dabbling in the crypto world, he made it clear that they still prefer cash transactions due to the related anonymity.
KYC and AML Checks to the Rescue
Every crypto exchange that acts as a gateway between the fiat and crypto world is required to put some form of Know Your Customer (KYC) and anti-money laundering (AML) checks in place. This prevents known terrorists from depositing large sums of funds into their accounts in order to finance illegal operations. Should crypto funds be identified as having being used for terrorist operations, it can be traced back to the exchange where they were acquired and the customer profile can be pulled from the exchange’s system. While this process requires time and effort – and can be confusing for novice crypto users – government agencies that are dedicated to eradicating terrorism can trace practically every coin with ease.
Risky Countries Using Cryptos
America has placed sanctions upon a number of countries it believes are actively financing terrorism through fiat currencies. In turn, these sanctions have caused widespread economic damage. In an effort to circumvent the sanctions placed upon them, these countries are slowly turning towards cryptos as a way out of crippling poverty. Venezuela has gone so far as to create its own cryptocurrency and Iran is attempting to follow suit. However, Venezuela’s government-backed cryptocurrency – the Petro – has received international criticism, with citizens actually turning to BTC and DASH for solace.
Due to exchanges using KYC and AML checks, it is becoming harder for people to use cryptos for illegal purposes. As regulation becomes more commonplace, we’ll start to see a world where illegal activities are virtually impossible to carry out thanks to the public and traceable nature of cryptocurrencies.