Cryptocurrency, Blockchain, Legal Framework and Sanctions: The Relationship Between Cryptocurrencies and Financial Crimes and the Measures to Be Taken
We have provided a general overview of cryptocurrencies and related technologies. In this article, we examine how certain inherent characteristics of cryptocurrencies relate to financial crimes and the measures that should be taken.
In many countries, cryptocurrencies are tax-exempt, and the ability of banks or governments to seize them is limited. Moreover, as mentioned in our previous articles, many cryptocurrencies are extremely difficult—if not nearly impossible—to trace. These characteristics make cryptocurrencies attractive for financing criminal activities. Individuals who wish to avoid transaction monitoring, seek tax exemptions, or conduct illegal activities often prefer using cryptocurrencies.
As of May 2021, with the publication of MASAK’s Basic Principles on the Obligations Regarding the Prevention of Laundering of Proceeds of Crime and Financing of Terrorism for Cryptocurrency Service Providers, the responsibilities of crypto asset service providers in combating financial crimes have significantly increased. Service providers are now required to conduct customer identification and, where necessary, report to MASAK when the transaction amount—or the total amount of multiple linked transactions—reaches TRY 75,000 or more, or when a transaction is deemed suspicious.