Colombia market watchdog finds evidence of crypto money laundering – reports

Colombia’s anti-money-laundering czar Javier Gutiérrez López said that a government financial watchdog had detected signs of money laundering and terrorist financing activities through the use digital assets, Bloomberg reported this week.

Gutiérrez López, the director of Colombia’s Financial Information and Analysis Unit (UIAF), which has a mandate to investigate and monitor transactions across Colombia’s financial systems for signs of illicit activity, told the publication that his agency had already detected some red flags in the crypto space.

‘[The UIAF] has already detected possible money laundering and terrorist financing operations using virtual assets,’ he said an interview with the publication.

Virtual assets have raised red flags across a number of suspicious transaction reports which the UIAF has been tasked with combing over as a way of tracing the flow of illicit money, per Bloomberg.

The agency said that between 2014 and 2021, it had received 1,379 suspicious transaction reports involving digital assets.

Gutiérrez López shared the information – a rare move, according to Bloomberg – at a press conference discussing the state of Colombia’s anti-money-laundering regime with a specific focus on protecting non-profits while also supporting its growing crypto industry.

His comments follow the release of proposed draft rules released by Colombia’s financial industry regulatory, the Financial Superintendence of Colombia, which would create a risk management system to combat money laundering and terrorist financing, including guidelines for methods of tracing crypto transactions.

The guidelines were proposed to support the country’s ‘Sandbox’ initiative launched in 2021 which allows banks to work more closely with cryptocurrency exchanges to buy and sell digital assets.

‘It’s no secret that money laundering and terrorist financing through virtual asset mining is due to the fact that illegal money can be used to acquire computer tools for mining service,’ said Gutiérrez López, who became director of the UIAF in September 2018 after working there for 12 years.

‘In this way, illegal money that drives the initial offer can be mixed with legal money,’ he added.

However, Gutiérrez López said that in looking to crack down on potentially illicit transactions in the crypto space, his agency’s mandate as a watchdog shouldn’t interfere with the Colombian government’s role in supporting the industry as it matures.

‘Our goal is not to stigmatize virtual assets, we want to protect them from the penetration of illicit money. But it is necessary to evaluate and understand the risk in operations with digital assets and move towards a single anti-money-laundering regulation,’ he said.

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