Germany’s Federal Ministry of Finance: Privacy Coins a Risk for Money Laundering Criminal Activities

The German Finance Ministry issues new 'First National Risk Analysis 2018/2019' report cautioning the threat that privacy coins such as Monero (XMR) pose for illegal activities.

The German Finance Ministry’s annual risk report titled “First Money Laundering and Terrorist Financing National Risk Assessment” laid out the risks involved with each cryptocurrency and its effects on financial security.

The latest report expressed concerns toward the privacy-focused coins like Monero. The report highlighted the rise in the use of these tokens in criminal activities as they are harder to trace.

The report noted the difference between pseudo-anonymous and anonymous tokens. Citing that pseudo-anonymous tokens can be traced back to their public ledger and analyzed for suspicious activities. On the contrary, anonymous tokens such as Monero (XMR) and Zcash (ZEC) are inherently private which do not disclose any data associated with the transacting party.

The report caution over the use of such tokens, even though it’s market presence is very low. The ministry report noted that these tokens are getting more popular by the day and may become a go-to token for criminals.

The use of cryptocurrencies for illicit activities has been proven to be much lower than common belief. A team at MIT with the help of AI found that only 1-2 percent of Bitcoin transactions have been ever used for criminal activities.

The price volatility of these digital assets makes it difficult to be used as a mode of payment and thus stablecoins can become a convenient way of launching money than other crypto assets. The report noted,

“The use of cash, in contrast to the use of pseudonymous crypto assets, leaves no traceable footprint and is easy to handle, so it can be assumed that, for example, the transfer of funds in the field of ​​terrorism financing alongside money transfer service providers currently continues mainly via cash couriers.”

Sritanshu Sinha
Sritanshu Sinha
Sritanshu is an up-and-coming writer who has rolled up his sleeves and really put himself in a real position to learn, educate and translate cryptocurrencies to the world. Since early 2018 he has written nearly one thousand articles for B.E.G. and has a true passion for emerging technologies such as digital startups and economic anthropology. Living in India, he personally loves the concept and idea of bitcoin as a whole and believes it is one of humanity’s best bets on creating a true borderless economy worldwide.


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