Cryptocurrency and Financial Crime in Switzerland on the Rise

Growing Implications of Cryptocurrencies on Swiss Finances

Bern, February 28, 2024 - The increasing use of cryptocurrencies has brought significant implications for the financial system in Switzerland. However, these virtual assets are increasingly being misused for illicit purposes, according to a recent report by the interdepartmental coordinating group on combating money laundering and the financing of terrorism (CGMF).

The Blurring of Lines between Traditional Finance and Virtual Assets

The rise of cryptocurrency services among Swiss financial intermediaries has led to a blurring of lines between traditional finance and the virtual asset sector. As a result, criminals are now using cryptocurrencies for a wide range of illicit activities, including:

• Theft: Stolen funds or assets are being laundered through cryptocurrencies.
• Fraud: Cryptocurrencies are being used to commit scams and other types of financial fraud.
• Transnational crime: Cryptocurrencies are being used to facilitate money laundering and terrorist financing.

Risks of Money Laundering and Terrorist Financing on the Rise

According to the CGMF report, the popularity of virtual assets has greatly increased the risks of money laundering and terrorist financing in Switzerland. The number of suspicious activity reports (SARs) related to cryptocurrencies submitted to the Money Laundering Reporting Office Switzerland (MROS) has surged in recent years, with nearly 14% of all incoming SARs linked to virtual assets in 2022.

Loss Amounts Reach Double-Digit Million Levels

The report also highlights a significant increase in loss amounts resulting from cryptocurrency-related crime, reaching double-digit million levels in Switzerland in 2022. To mitigate these risks, the CGMF proposes several action steps:

Filling Data Gaps on the Virtual Asset Sector

Filling data gaps on the virtual asset sector will help to identify areas where more resources are needed.

Encouraging Financial Intermediaries with VA Activities to Report Suspicious Activity

Encouraging financial intermediaries with VA activities to report suspicious activity will help to prevent and detect money laundering and terrorist financing.

International Cooperation Crucial in Countering Misuse of Virtual Assets

The CGMF report emphasizes the need for all stakeholders involved in combating money laundering and terrorist financing to allocate sufficient capacity and resources to effectively address the issue. Furthermore, international cooperation is crucial in successfully countering the misuse of virtual assets. Switzerland must intensify its efforts in this area to protect its financial system from the risks associated with cryptocurrency misuse.

The CGMF Report: A Comprehensive Overview and Practical Recommendations

The CGMF report provides a comprehensive overview of the challenges posed by cryptocurrency-related crime in Switzerland and offers practical recommendations for minimizing these risks. The findings and proposals outlined in the report will be essential for policymakers, financial institutions, and law enforcement agencies working to combat money laundering and terrorist financing in the virtual asset sector.