The Council of Europe’s Economic Crime and Cooperation Division (ECCD) held a two-day workshop on ‘Preventing the abuse of virtual assets’, with the aim of increasing awareness of potential financial crime risks associated with virtual assets.
More than 50 official representatives from 12 jurisdictions attended the conference, signalling widespread interest in preventing the abuse of virtual assets for illicit purposes.
Key highlights of the workshop included:
- Discussion surrounding practical challenges to the implementation of international standards to virtual assets;
- The pros and cons of establishing alternative regulatory and institutional framework for VASPs;
- Known links between abuse of virtual assets and economic crime;
- Issues surrounding freezing, seizing and recovering virtual assets.
The potential use of cryptoassets for illicit purposes is a question that has surrounded the industry since its first days, and has come back to the forefront with ongoing events in the Middle East. Firms with operations in the EU should take notice of this narrative, the issues discussed during the ECCD workshop, and monitor potential future regulatory developments in the EU and elsewhere. The inherent transparency of blockchains, and the blockchain analytics tools that analyse this data, are an important tool to mitigate these risks. Firms should also effectively integrate these tools into their control frameworks to demonstrate to regulators how they are using them to address these issues.