[Tech & Column] The duality of blockchain technology and money laundering

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[Tech & Column] The duality of blockchain technology and money laundering

디지털데일리 발행일 2023-06-02 11:20:03

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Geun Seob SONG 송근섭 / Chairperson of KaAML 한국자금세탁방지학회 회장

With the global spread of cryptocurrency, interest in blockchain technology and empirical business cases are also rapidly increasing. However, a paradoxical situation arises in which the transparency and security brought by blockchain simultaneously cause money laundering problems.

Blockchain basically records all transaction data in an open, immutable form. This plays an important role in ensuring the transparency of blockchain transactions and preventing fraud or misconduct. However, on the other hand, there are concerns that blockchain can be used for money laundering because of these characteristics.

Money laundering is the overall process of making illicit proceeds look like legitimate assets. The purpose of this process is usually to conceal the source of wealth or make it difficult to trace funds through complex financial transactions. Due to the nature of blockchain technology, pseudonymity and transparency are guaranteed at the same time, so there is a possibility that it can be abused for money laundering.

Money laundering in blockchain is usually conducted using a variety of cryptocurrencies. Cryptocurrencies allow money-launderers to conduct transactions while hiding their true identity. This, coupled with the immutability of blockchain, makes it difficult to trace the source and destination of funds.

However, it is undeniable that the development of blockchain technology is contributing greatly to the provision of AML (Anti-Money Laundering) solutions. Since open and immutable blockchain records provide a de facto “Anyone can access the ledger records,” appropriate tracking and analysis tools can help detect anomalous transactions and trace the flow of laundered funds.

Various institutions are conducting research on 'blockchain data analysis' to realize this. It analyzes data on the blockchain to detect abnormal transactions and, where possible, contributes to AML. Additionally, a public effort is underway to address the complex relationship between blockchain and money laundering, with new cryptocurrency regulations and laws now being introduced.

After all, blockchain technology plays a great role in terms of AML. Technology itself is neutral, and how it is used determines its consequences. Therefore, it is necessary to understand the importance of proper use of blockchain technology and proper regulation and oversight for it.

The complex interplay between blockchain and money laundering raises a broader discourse about how technology interacts with society. The development of technology always requires accountability and regulation; they play a key role in ensuring that blockchain technology is used in a fair and secured manner for the safety and soundness of society as a whole.

In addition, in order to vitalize the blockchain industry, legal and institutional support for anti-money laundering is essential along with mutual cooperation between the private and public sectors. Discussions on the FATF-recommended PPP (Public-Private Partnership) should be started together with the government, supervisory authorities, academia, and private businesses.

* 본 컬럼은 본지 편지방향과 무관합니다.