Emerging technologies present challenges to anti-money laundering fight

Nov 14, 2016 News

– Finance Expert

Canadian Finance expert Matthew Maguire has said that the emergence of new technology in the area of finance and money transfer is presenting challenges for the global fight against money laundering.
During his presentation at the recently held Private Sector Commission’s lecture themed “anti-money laundering and you”, Maguire said that one of the new technologies which is gaining prevalence is the “Bit Coin” system.
He said that $2B was transferred to Canada from China using the system. Bit coin is a digital currency created and held electronically. According to the finance expert, Bit Coin is much like an Automated Teller Machine (ATM) whereby a person can exchange physical cash for bit coin currency and vice versa.
Maguire said that the system is used a lot since there is an export barrier on how much money a person can take out of a country at one time.
“The real problem with that emerging technology is that it doesn’t require an intermediary.
“So if I’m transferring from one person to the other, I don’t need a bank in between, I don’t need an authority in between.”
Maguire explained that it is nearly impossible to seize that bit coin. He said that if the individual did not use their online wallet, then authorities would not have any power to seize the bit coin and the value which it carries.
He said that the only way authorities can seize money which is being laundered under this system is by getting hold of the security code which each user is given. This security is vital, since if the information is lost, the bit coin cannot be accessed by anyone, including the user.

Matthew Maguire making his presentation

During Maguire’s presentation, he mentioned that one of the strategies needed to fight money laundering is to make the environment hostile for persons who wish to launder money from the proceeds of crime.
He said that businesses and financial institutions need to create boundaries around them so as to make it difficult for money launderers. This he said is done by collecting more information from customers and clients.
“By verifying their identity, which is an awkward thing for a criminal, by monitoring their transactions and then by reporting that information to a financial intelligence unit who will then report that information to the police.”
However, Maguire said that there are problems with this scenario. He said that one of the problems is that some legitimate players are excluded. According to him, when these barriers are created, the net catches more than is originally targeted.
He said that companies are excluded from benefiting from financial services due to the potential risk which is created. “The controls which are meant to keep out the bad are also keeping out the good.”
Maguire is a professional chartered accountant and a member of the Canadian government’s Department of Finance Public Private Advisory Committee on anti-money laundering and countering the financing of terrorism. He congratulated Guyana for being taken off the FATF watch list as well as the Caribbean Financial Action Taskforce watch list.

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