Business in Tech

Russia To Recognise Bitcoin And Other Cryptourrencies By Next Year In The Fight Against Money Laundering

The Russian government could start recognising Bitcoin and other cryptocurrencies as early as next year in a sharp move from last year when the Russian Finance Ministry says it would jail users of such currencies. The government through its Deputy Finance Minister Alexey Moiseev now says they intend to recognise the currencies in order to combat money laundering.

According to Bloomberg, Moiseev says “The state needs to know who at every moment of time stands on both sides of the financial chain. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.”

The Russian plan comes a few months after China also signaled that its Central Bank could in fact be thinking in that direction. Cryptocurrencies are gaining popularity with Bitcoin being the most popular but while its use is on the rise, there are also reports that such currencies could be the new way for money laundering by some because its isn’t exactly regulated by any government. Like Bloomberg puts it, “tracking cryptocurrencies could become the latest tool enlisted in the Bank of Russia’s battle against money laundering, which has seen hundreds of lenders lose their licenses over the last three years. The plan to legalize and monitor bitcoin is taking shape as traditional schemes are drying up, with dubious operations such as fake trades and loans used to move money abroad dropping by half to $771 million last year, according to central bank data.”

Bitcoin has so far gained 28 percent since this year and is now trading at prices above $1,100.

Bloomberg adds that “Foreign banks have sometimes been swept up in investigations of Russian schemes. Royal Bank of Scotland Group Plc received information requests from the U.K. in March in relation to an alleged money laundering ring that moved money through Moldova and Latvia between 2010 and 2014.

Deutsche Bank AG in January was fined $629 million by U.K. and U.S. authorities for compliance failures that saw the bank help wealthy Russians move about $10 billion abroad using transactions that may have covered up financial crime.

Crime, corruption, and tax evasion spawned at least $211.5 billion in illicit Russian outflows between 1994 and 2011, with illegal transfers reaching $552.9 billion, according to Washington-based Global Financial Integrity. “

But overall, while it looks as if Western governments still have yet to come on board with the possibility of getting involved in the regulation of cryptocurrencies, it looks like China and Russia want to play a larger role in it.