|Dec 03, 2018 08:00 PM||By: Ben Noble | 1663 Views|
Business Korea reported, that according to a risk assessment report by the South Korean financial authorities, it is suggested that banks are more vulnerable to illegal financial activities including money laundering and terrorist financing compared to digital currencies.
The research was conducted by the division of South Korea’s Financial Services Commission in an effort to assess a number of different financial entities, which include banks, insurers, securities firms, credit card services, mutual financing companies, and digital currency trading platforms.
The risk assessment report found that banks are most vulnerable to money laundering risks among domestic financial institutions. They are followed closely by securities companies, insurers, mutual financing companies and credit card companies.
'The banks have better systems against money laundering and terrorist financing than other financial companies. Yet the former’s vulnerability is higher due to the larger size of the banking sector and the innate characteristics of their products and services like trade financing, cash management service and forex trading', the report reads.
The report further showed that fiat and crypto-related transactions are also vulnerable to such illegal financial activities, but there is less chance that digital assets are exploited for terrorist financing.
The South Korean financial authorities said the anonymity of cryptocurrency trading hinders tracking, and criminals can take advantage of it.
'The same applies to cash dealing as large-denomination bills rarely return'
Europol, the European Union's law enforcement agency, recently published a similar report, which said that terrorists are more inclined to use traditional banking methods as opposed to digital currencies for funding illegal operations in Europe.
'Despite the clear potential, none of the attacks carried out on European soil appear to have been funded via cryptocurrencies. The use of cryptocurrencies by terrorist groups has only involved low-level transactions – their central funding still stems from conventional banking and money remittance services.'
Even though cryptocurrencies are less utilized for illegal financial activities, the South Korean financial authorities emphasized the need to establish a clear crypto legislation in South Korea in response to the rising incidents of crypto-related crimes in the country.