No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe
Jump to a Section
  • At the Office
    • Ethics
    • HR Compliance
    • Leadership & Career
    • Well-Being at Work
  • Compliance & Risk
    • Compliance
    • FCPA
    • Fraud
    • Risk
  • Finserv & Audit
    • Financial Services
    • Internal Audit
  • Governance
    • ESG
    • Getting Governance Right
  • Infosec
    • Cybersecurity
    • Data Privacy
  • Opinion
    • Adam Balfour
    • Jim DeLoach
    • Mary Shirley
    • Yan Tougas
No Result
View All Result
Corporate Compliance Insights
Home Compliance

It’s Unanimous: Congress Seeks Tech to Battle Digital Currency Money-Laundering

Bipartisan Support Demonstrates the Need for Fintech in the Fight Against Financial Crime

by Ron Teicher
March 26, 2019
in Compliance, Featured
illustration of blue and red hands shaking

With more than $200 billion a year in losses due to transaction fraud, the need for the Financial Technology Protection Act is clear. EverCompliant CEO Ron Teicher discusses the bill’s aims, which have been met thus far with unanimous support from both sides of the aisle.

Republicans and Democrats seem to agree on very little today, but one thing they do agree on is the importance of battling terrorism by focusing on the illicit use of digital currencies.

That is the focus of H.R.56, the Financial Technology Protection Act, which proposes to “establish a Fintech Leadership in Innovation and Financial Intelligence Program to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes.” The bill, cosponsored by two Republicans and two Democrats, passed the House on January 28th without objections and is now before the Senate, awaiting debate and approval.

Among its other tenets, the bill sets up a committee that will evaluate tech solutions and provide funding to develop promising ones. The bill says, “entities located in the United States, including academic institutions, companies, nonprofit institutions, individuals and any other entities located in the United States that the Secretary determines appropriate,” are eligible for this funding.

The role of digital currency in financing terror and crime is well-known to anyone with an email account. The recent wave of e-mail messages sent out by hackers threatening to expose the recipient as a sexual deviant (they claim to have a split-screen video showing victims “enjoying” porn on their laptops) includes a demand of payment in digital currency to buy their silence. Of course, there are no videos, but the hackers are bold enough to give you their Bitcoin wallet information, where you are instructed to deposit $1,000 worth of Bitcoin. And why not; they know, as well as law enforcement does, that there really is no practical way to track them down, as the accounts are anonymized – sort of like the old numbered Swiss bank account that money launderers and tax cheats used to be able to take advantage of.

If it works for low-level hackers, it will work for international criminals operating on large scales, as well as terrorists. An EU report says that “the public record demonstrates that religiously and politically inspired extremist actors have utilized virtual currencies (VCs) in relatively low-volume and unsystematic fashion and may be seeking to expand their use. The prospect exists for terrorist funding (TF) through VCs to mature and to grow, even if the precise nature, scale and scope of this risk remains difficult to anticipate.”

As mentioned, there are no practical ways to track down digital currency account users, although there are methods that can be used to do so. But that is the point of H.R.56. The bill is a method for the government to reach out to private enterprise to develop systems that will prevent the use of digital currencies, and by extension the banking system, to carry out terror attacks.

In the end, digital currency is really all about the cash, at least for most bad actors, as they have to pay for weapons, personnel, vehicles, materials, living expenses etc. for themselves and their staff. The vendors they do business with, the lower-level people in their employ and the vehicle dealerships they buy from all want real money, at least under the way the economy currently functions. The challenge facing them is hiding the flow of money they collect or launder for these purposes.

Law enforcement and international agencies watch for transactions that involve, for example, the purchase of large amounts of fertilizer to non-farmers, which could be an indication that someone is building a bomb. The trick for terrorists is to hide the transaction while stealthily paying for the products they need to carry out their attack. Digital currencies, which can be transferred to the fertilizer merchant and then cashed out, hidden among their other transactions, is the perfect cover for that transaction.

But there is a point where digital currencies are vulnerable, in that the people using them for illicit purposes can be identified; that is the junction where digital currencies are converted into money. Bad actors who cash out their digital currencies (i.e., sell them to someone else for money) need to deposit that money somewhere, such as in a bank account, debit account, etc. The deposit of cash into an account from any source could be analyzed by a big data system to determine the nature of the transaction between the entity that sent the money and the account that received it.

For example, if the recipient is connected to a suspicious organization (perhaps already listed by law enforcement as someone worth watching) and they get a payment from a consulting firm, that might be enough to trigger an investigation by law enforcement. The analysis to determine that would be done by an automated big data system that would compare specific transactions to a profile of transactions that raise red flags (that profile would be developed by the big data system, which had analyzed billions of transactions) and, equipped with machine learning capabilities, the system would get more accurate and precise with each new search.

That’s just one way technology can be used to track down terrorists, as well as organized crime, international drug dealers and any number of bad actors. Whatever solutions are developed, there is no doubt that big data and machine learning will play a big role. It’s these kinds of solutions H.R.56 is designed to encourage. The passage of this bill is an act of bipartisanship, which – in our current climate of political animosity – underscores the importance of the issue.


Tags: Big DataFinancial CrimeFinTech
Previous Post

4 Privacy Trends Companies Must Consider to Achieve a Competitive Edge

Next Post

Protiviti’s 2019 IA Capabilities and Needs Survey

Ron Teicher

Ron Teicher

Ron Teicher is the CEO and founder of EverCompliant. He led EverCompliant from inception to become a leader in the field of merchant based fraud and transaction laundering detection. Today, EverCompliant serves some of the world’s largest financial intuitions. Prior to founding EverCompliant, Ron led the compliance product initiatives at Watchfire (acquired by IBM). He is a member of the Israeli bar association, and is frequent speaker at payment and fin-tech events.

Related Posts

monies illustrating money laundering

Power Shift: What Happens When America Steps Back From Global AML Enforcement?

by Joe Biddle
April 15, 2025

EU's new anti-money laundering authority emerges as potential counterweight amid uncertain US priorities

piggy banks in grid

Will Bank-Fintech Partnerships Face Continued Regulatory Scrutiny in 2025?

by Sheetal Parikh
January 28, 2025

Cross-industry coalition emerges to define best practices for embedded finance

chile la moneda presidential palace

New Law in Chile Seeks to Crack Down on Corporate Misconduct

by Francisca Franzani
October 7, 2024

Reform efforts will depend on how well organizations & prosecutors can adapt

seat in conversation

Dear Fintech Leaders, Invite Compliance to the Conversation, Early & Often

by Alan Carlisle
September 17, 2024

On a hypergrowth trajectory? Start with a foundation of compliance.

Next Post
man in red poncho facing waterfall

Protiviti's 2019 IA Capabilities and Needs Survey

No Result
View All Result

Privacy Policy | AI Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Research
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2025 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
No Result
View All Result
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe

© 2025 Corporate Compliance Insights