27 September 2014 at 10:56 am Written by

On 17th September I was asked to speak at the Crypto Summit on the Isle of Man, the title of the presentation (given to me I hasten to add) was ‘The Spectre of Digital Crime’. The conference was labelled as ‘the meeting place for digital currency entrepreneurs looking to create and maintain ethical and registered businesses. Over two days, top industry experts will share their views on the challenges and opportunities facing the industry and how to meet key business needs’.

The audience came from far and wide and in attendance were some big players in this new and emerging industry. Clearly there are opportunities on the Isle of Man to grasp this new technology given the large footprint of the financial institutions. There certainly seemed to be an appetite to embrace digital currency but only a small number present were urging caution.

The more I listened however the more I became convinced that this was a done deal and I had an inkling that my presentation may not be very well received in certain quarters. The perspective I wanted to give was to raise awareness around issues of AML, compliance and KYC with digital currency transactions on what has become known as ‘The Dark Web’. In particular the bad press ‘Bitcoin’ has because of its unintended (as I understand it) association with sites such as Silk Road. Prior to my presentation I heard one speaker tell the audience that the use of Bitcoin is not anonymous because of the ‘blockchain’, the inference being that there were no issues around KYC, compliance and source of wealth. Now I do not profess to be able to relate the inner workings of digital currency, there are people far more qualified than me to do that. However, the message I wanted to get across was that the use of TOR (or similar protocols) which anonymise your internet traffic coupled with digital currency surely has the potential to mask financial transactions? You only have to spend some time in Silk Road and/or The Hidden Wiki to see the proliferation of organised criminal activity aided by this technology and the opportunities it presents to buy and sell virtually any illicit commodity. I was not therefore going to be talking about digital currency transactions that are conducted openly on the surface web, which are of course quite different.

The time slot I had been given had already been reduced which did not allow for a proper period of discussion, it has to be said that the audience were lively and listened intently, however response from certain delegates was a little disturbing. One stating that this is no different from cloned credit cards, another saying we will always have financial crime there is no real difference here and so it went on. TOR and sites like it with digital currency give criminals the opportunity to be anonymous, the chances for law enforcement to apprehend them are thus limited and will be resource intensive. One of the questions I asked was if I was a criminal and had made my money selling drugs, identity documents, weapons etc on ‘The Dark Web’ and went on to wanting to invest my ill gotten gains, how could anyone ever properly establish my source of wealth? It didn’t seem to concern the majority of the people there and sadly, the reporting I have seen post event has only one mention of the word crime and that was about the low crime rate on the Isle of Man, hardly objective?

Coming up for a process to regulate digital currency in order to prevent financial crime is not going to be easy and the conference would have been an ideal venue to have extended discussions in this extremely important area because of the knowledge and experience of those people present. Unfortunately it was absent and in my opinion a missed opportunity with the focus seemingly being on the Isle of Man becoming the ‘capital’ for digital currency.

Digital currency questions are repeatedly coming up in the courses I run with real concern by Money Laundering Reporting Officers, this is one to watch!

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