This thesis aims to analyse the phenomenon of cryptocurrencies, specifically the legal understanding of cryptocurrencies, to assess whether they may be used to launder money, and if so, how this risk should be addressed in the United Kingdom. Cryptocurrencies have had a tumultuous existence since the publication of original white paper proposing the first cryptocurrency, Bitcoin, by Satoshi Nakamoto in October 2008. Bitcoin in particular has had dramatic fluctuations in its value, and it has been at the centre of high-profile scandals such as the collapse of the Mt Gox exchange in February 2014 and been utilised as the preferred payment method for ransomware demands, such as the ‘WannaCry’ cyber-attack on the NHS in May 2017. While awareness of cryptocurrencies is growing, the understanding, use and regulation of them remains limited in the United Kingdom. Cryptocurrencies allow transactions, of any size, to be completed within minutes, and without the need for financial institutions to facilitate, or any centralised government interference. The cryptocurrency model relies on a publicly distributed ledger that is maintained by all the computers in the system to keep it up to date and free from fraud and replaces individuals’ names with public codes, making cryptocurrencies pseudonymous. The limited awareness of cryptocurrencies, and the degree of anonymity afforded to users, could be viewed as an ideal opportunity for money launderers who are seeking to hide and disguise their proceeds of crime via a decentralised cryptocurrency system.
This thesis concludes that the United Kingdom has not kept pace with international best practice in anti-money laundering regulation with regards to cryptocurrencies, but also that the current international standards do not fully regulate cryptocurrencies from an anti-money laundering perspective. The gap between the United Kingdom and the leading regulation in the United States of America and Australia will be closed by the implementation of the 5th Anti-Money Directive. However, this thesis proposes that a tailored approach to cryptocurrencies is needed as the application of existing anti-money laundering measures is not compatible with cryptocurrencies and fails to address the blockchain.
Hillman, H. Money laundering through cryptocurrencies: Analysing the responses of the United States and Australia and providing recommendations for the UK to address the money laundering risks posed by cryptocurrencies. (Thesis). University of the West of England. Retrieved from https://uwe-repository.worktribe.com/output/4234061