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Working Paper 38: Cryptocurrencies in Asia and beyond: law, regulation and enforcement
The crypto industry has exploded in recent years, and authorities in different countries have been reacting in very different ways. Some have banned cryptocurrencies, while others are embracing them to varying degrees. Some are working hard to align their anti-money laundering regulations with FATF standards, while others are turning a blind eye. A few countries have confiscated huge quantities of crypto assets linked to crime and money laundering. Others are at square one in terms of enforcement, risking becoming a hub for crypto crime and money laundering and posing a serious vulnerability in the world’s financial system.
This Working Paper draws on a detailed analysis of how selected countries are addressing legal, regulatory and enforcement issues around cryptocurrencies and other virtual assets. The analysis is focused on Asia, but set in the context of global trends in crypto law, regulation and enforcement. It explores critical questions that will shape policies around virtual assets at the corporate, national and international levels:
- What is working in terms of crypto regulation and enforcement?
- What are the implications of different policy choices on crypto assets – for the industry, for the countries themselves and for global financial integrity as a whole?
- What would the crypto wave possibly bring next?
The Paper also highlights broader developments needed to bring light and clarity to laws, policies and practices around the crypto industry, such as collaboration between both market players and governments.
Jurisdictions touched upon in this Working Paper alphabetically include Bhutan, Central African Republic, El Salvador, Hong Kong SAR, India, Indonesia, Japan, Kazakhstan, Malaysia, Myanmar, Russia, Singapore, South Korea, the Philippines, the People’s Republic of China, Thailand, Ukraine and Vietnam.
A list of key terms and abbreviations have been prepared in the Annex to this Working Paper for the readers’ easy reference.
About this Working Paper
This Working Paper is a collaboration between Dorothy Siron, Co-Managing Partner, Zhong Lun Law Firm LLP and Federico Paesano, Senior Financial Investigation Specialist, Basel Institute on Governance.
Dorothy Siron provided the bulk of the analysis and discussion, while Federico Paesano provided a selection of case studies and was co-author of the seven recommendations contained in section 4. The collaboration was facilitated by the International Academy of Financial Crime Litigators, an independent, non-partisan global centre that shapes and advances financial crime litigation practices for the future.
The publication is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650. It is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0).
Suggested citation: Siron, Dorothy, and Federico Paesano. 2022. “Cryptocurrencies in Asia and beyond: law, regulation and enforcement.” Working Paper 38, Basel Institute on Governance. Available at: https://baselgovernance.org/publications/wp-38
Disclaimer: This Working Paper does not, and is not intended to, constitute and/or substitute legal or other professional advice. The content of this Working Paper is updated as of 4 May 2022 and is intended for general informational purposes only. No representations have been made as to its accuracy and completeness. You should seek independent legal or other professional advice before acting or relying on any of the information contained herein.
Combating virtual assets-based money laundering and crypto-enabled crime: Recommendations of the Tripartite Working Group on Criminal Finances and Cryptocurrencies
These seven Recommendations emerge from the 5th Global Conference on Criminal Finances and Cryptocurrencies, held virtually on 7-8 December 2021.
The annual conference is organised by the Working Group on Criminal Finances and Cryptocurrencies, a tripartite initiative of the Basel Institute on Governance, INTERPOL and Europol that dates back to 2014 and was formally established in 2016.
The Recommendations are intended to guide law enforcement, judicial authorities, regulators and the private sector in broad approaches that are necessary to protect citizens and the global economy from the risks of abuse of cryptocurrencies and other virtual assets.
They cover:
- International cooperation
- Virtual asset recovery
- Public-private cooperation
- Harmonised regulation and its effective implementation
- Investigative techniques and technologies
- Capacity building
- Multidisciplinary approach, including through specialised law enforcement units
Cryptolaundering: anti-money laundering regulation of virtual currency exchanges
This paper discusses anti- money laundering regulation for virtual currency intermediaries, by showcasing and comparing regulatory models at the national and international levels.
It is found that anti-money laundering regulation for virtual currencies — more than being merely “nice to have” — contains considerable potential in the fight against economic crime. Where financial intermediaries engaged in virtual currencies are required to gather the full spectrum of information needed to identify their customers and the source of funds, virtual currencies become much less attractive to money launderers than traditional fiat money systems. Furthermore, anti-money laundering regulation means that supervisory and investigatory authorities can identify and act against money launderers and other delinquents.
The author presented this paper at a conference at the University of the Western Cape, South Africa, in October 2018. It was published in the Journal of Anti-Corruption Law (Volume 3, Number 2: 2019, pp1-15).
The author would like to emphasise that the world of cryptocurrencies and money laundering regulation moves fast and many things may have changed since the paper was written.
Working Paper 28: Regulating cryptocurrencies: challenges and considerations
Cryptocurrency regulations are developing fast. Across the world, authorities are reacting to the emerging threat posed by criminals using new payment methods to conceal and launder the proceeds of their crimes.
However, as the application of anti-money laundering/combating the financing of terrorism (AML/CFT) due diligence requirements becomes stricter and more entities implement preventative measures, criminals are constantly looking elsewhere for potential havens for their illicit activities.
This Working Paper offers an insight into some potential consequences of changes in AML/CFT legislation in relation to cryptocurrency exchange services and virtual assets.
This paper is part of the Basel Institute on Governance Working Paper Series, ISSN: 2624-9650.
Quick Guide 1: Cryptocurrencies and money laundering investigations
This quick guide to cryptocurrencies and money laundering investigations addresses the use of cryptocurrencies such as Bitcoin or Monero to facilitate serious crimes or to launder stolen money. It was originally published in March 2019 and updated in August 2021.
It explores, in brief:
- What kind of crimes involve cryptocurrencies?
- How do you “follow” virtual money?
- What are the challenges in recovering stolen assets held in cryptocurrencies?
- What more can law enforcement do to enhance their ability to investigate and prosecute cryptocurrency-related crimes?
The author, Senior Investigation Specialist Federico Paesano, leads the Basel Institute’s Cryptocurrencies and AML Compliance Training. The four-session course is delivered virtually and is open to anyone seeking to prevent, detect and investigate the use of virtual assets for illicit activities, including both law enforcement and private-sector professionals.
The guide draws on recommendations of the Global Conference on Criminal Finances and Cryptocurrencies, co-hosted annually by the Basel Institute on Governance, Europol and INTERPOL.
About this Quick Guide
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. It is part of the Basel Institute on Governance Quick Guide series, ISSN 2673-5229.
