Cryptocurrencies and the Risks of Money Laundering and Terrorist Financing: Proposals for a Regulatory Regime
Date
2023
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of the Witwatersrand, Johannesburg
Abstract
Rapidly emerging new technology and payment methods are gradually replacing traditional payment methods and sovereign legal tenders as viable substitutes in the global economy. The emergency of cryptocurrencies on the world’s economies has brought with it excitement, frustration, and uncertainty in equal measures. Cryptocurrencies are decentralised convertible virtual currencies that rely on the use of blockchain technology and the math-based peer-to-peer reference without the reliance on a central controlling authority to administer, monitor, regulate and exercise oversight control. Cryptocurrencies offer many potential benefits, such as speed of payment settlement, reduced costs of doing business, speedy cross-jurisdictional reach, and accessibility, as well as the anonymity of the users compared to the traditional payment methods. The integrity of the financial systems is at danger due to these same benefits and advantages. The risks and dangers of money laundering, terrorist financing, fraud, tax evasion, and other unlawful actions are associated with cryptocurrencies. The first cryptocurrency, Bitcoin, was created in 2008. The internet and globalization have allowed cryptocurrencies to enter South Africa. These currencies are not accepted as legal money in the South African legal system at this time. The objective of this desk-top research is to consider, amongst others, the following: what cryptocurrencies are, why cryptocurrencies are a Money Laundering and Terror Financing (ML/TF) risk, the red flags in ML/TF through cryptocurrencies transactions, structural and regulatory weaknesses associated with ML/TF through cryptocurrencies and the recommendations for structural and regulatoryenhancements and changes to combat the ML/TF risks from cryptocurrencies. This thesis recommends the need for regulatory intervention in South Africa. It argues that there is a need to regulate cryptocurrencies through the amendments to the relevant legislations such as the Financial Intelligence Centre Act, the Consumer Protection Act, Financial Advisory and Intermediaries Act, amongst others
Description
A research report submitted in partial fulfillment of the requirements for the degree of Master of Laws by Coursework and Research Report at the University of the Witwatersrand, Johannesburg, 2023
Keywords
Global economy, Technology, Cryptocurrencies, Risks of Money Laundering, Terrorist Financing, UCTD
Citation
Masuku, Jabulani. (2024). Cryptocurrencies and the Risks of Money Laundering and Terrorist Financing: Proposals for a Regulatory Regime [Master’s dissertation, University of the Witwatersrand, Johannesburg]. WireDSpace.https://hdl.handle.net/10539/38751