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Cryptocurrency and Financial Crime in Guyana: A Growing Concern

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Guyana, a country known for its rich natural resources and growing economy, has seen a significant increase in cryptocurrency transactions and financial crimes in recent years. As the use of digital assets becomes more widespread, law enforcement agencies are struggling to keep pace with the evolving nature of financial crimes.

The Rise of Cryptocurrency in Guyana

The Treasury’s publication on Crypto-Assets: Implications for Consumers, Investors, and Businesses highlights the growing importance of cryptocurrency in Guyana’s financial landscape. With an aggregate market capitalization hovering just below $1 trillion since June 2022, it is clear that digital assets are here to stay.

Consumer Demand for Digital Asset Services

Consumer research conducted by Raddon Research Insights found that 28 percent of consumers are very or extremely interested in having digital asset services as part of their banking relationship. This growing demand for digital asset banking and custody services will force traditional financial institutions in Guyana to adapt to the changing landscape.

Regulatory Uncertainty and Financial Crime Risks

Regulatory uncertainty aside, financial institutions must prioritize identifying and understanding the key threats, vulnerabilities, and illicit financing risks related to virtual assets. A thorough assessment of both direct and indirect risk exposure is crucial when providing digital asset services.

Indirect Risk Exposure

For instance, partnering with Virtual Asset Service Providers (VASPs) that offer custody and exchange services can indirectly expose a financial institution to facilitating suspicious transactions through their institution. Payment service providers that use conventional operating bank accounts to deposit or withdraw fiat funds also pose indirect Money Laundering/ Terrorist Financing risks to traditional financial institutions.

FATF Guidance on Virtual Assets

The Financial Action Task Force’s (FATF) updated guidance on virtual assets provides valuable insights into compliance and due diligence practices for partnering with VASPs. The traditional risk-based approach recommendations in FATF’s guidance enable financial institutions to cost-effectively adopt these practices by leveraging existing frameworks used for customer due diligence and risk assessments within functioning Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) programs.

Best Practices for Financial Institutions

Financial institutions must conduct thorough counterparty VASP due diligence prior to partnering with VASPs, as well as ongoing Customer Due Diligence (CDD) and monitoring on a periodic basis. A key aspect of this due diligence includes confirming whether a VASP or payment service provider has performed a risk assessment of its AML/CFT program.

Avoiding Reputational Risk Implications

Guyana’s financial institutions must prioritize addressing compliance with evolving regulatory expectations while avoiding reputational risk implications. As the digital assets market continues to grow, it is crucial that financial institutions remain vigilant in their efforts to meet customer demand without compromising the integrity of their AML/CFT programs.

Conclusion

In conclusion, cryptocurrency and financial crime are growing concerns in Guyana, and it is essential for traditional financial institutions to adapt to the changing landscape by prioritizing due diligence and risk assessments. By doing so, they can create long-lasting business relationships while addressing compliance with evolving regulatory expectations.