Cryptocurrencies Make Fight Against Child Trafficking Hard Says UN Chief

Cryptocurrencies have long been painted as instruments of financial crimes and an avenue through which several criminal enterprises can operate.

Governments and regulatory authorities have been trying to ensure that they put in place measures to try and combat the illicit activity that is committed using cryptocurrency.

According to a top official at the United Nations, crypto assets are making international efforts against money laundering, terrorist financing, and cybercrime difficult.

Neil Walsh, the Chief of the Cybercrime and Anti-Money Laundering branch of the UN’s Drugs and Crime office, said that the levels of privacy offered by cryptocurrencies through anonymity features are to the advantage of criminals who hide behind these assets.

Walsh pointed out that cryptocurrencies are a tool used in the child trafficking industry, a matter that is of grave concern to the UN.

He said that in the past, it was easier to keep track of child trafficking rings through following payments made online to areas in which kids are being trafficked from or are being abused online.

With the coming of cryptocurrency, keeping track of these payments has been made far more complicated, and investigators are finding it hard to catch the criminals involved in this industry.

Encryption of payment systems and secrecy required by criminal enterprises

Illicit activity such as child trafficking is reliant on secrecy and cryptocurrencies provides this veil. Walsh said that if you add encryption and pseudo-anonymity to monetary systems, it makes it hard for authorities to fight against such activity.

Walsh noted that cryptocurrencies create a higher risk for children across the world due to the way they protect criminals.

Walsh called for investigators to focus on crypto exchanges where illegally acquired cryptocurrencies may be “washed.”

The chief said that adding security protocols to these exchanges will not affect the average crypto user and that there is a limited risk in providing details of who one is and the purpose for which a certain amount of cryptocurrency is being moved.

FATF regulations for cryptocurrency

The FATF, an organization made up of many governments whose mandate is to fight against financial crime, came up with a list of recommendations which could be used to regulate cryptocurrencies in all its member states.

The proposed regulations were announced in June, and they include rules which push crypto exchanges to adopt the “travel rule.”

This rule states that exchanges should have know your customer (KYC) information about wallet users on their platforms and the other crypto accounts to which crypto funds are being sent to.

If these FATF proposed regulations are adopted by member states, authorities such as the UN would have a better chance in their struggle against illegal activity.

For online crypto trading, these regulations could have an adverse effect. Some people trade cryptocurrencies because of the anonymity associated with these digital assets.

There are various legal reasons why one could prefer anonymity, and adopting these regulations could affect the crypto trading industry significantly.