News / Economy

US Officials: Virtual Currencies Vulnerable to Money Laundering

FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
FILE - Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah.
Reuters
— Virtual currencies may give consumers a cheap, efficient and convenient way to move money, but those same attributes make them appealing to criminals, the head of the Justice Department's Criminal Division told Congress on Monday.
 
“We have seen increasing use of such currencies by drug dealers, traffickers of child pornography, and perpetrators of large-scale fraud schemes,” Mythili Raman, the acting assistant attorney general for the division, told a Senate panel.
 
The currencies offer criminals both anonymity and the ability to process transactions that cannot be reversed, which can “significantly complicate” the government's ability to follow money trails in related criminal investigations, she told the Senate Homeland Security Committee.
 
Further complicating efforts, many digital currency services do not have controls to protect against abuse, Raman said.
 
“Many are still struggling with implementing appropriate anti-money laundering, know-your-customer and customer due diligence programs,” she said in prepared remarks.
 
Raman appeared alongside top officials from the Secret Service and Financial Crimes Enforcement Network before the Senate Homeland Security Committee to answer questions about the growing use of digital currencies such as Bitcoin, and whether the government is doing enough to police the market.
 
It was the first such hearing before Congress. Bitcoin surged over 27 percent to a new high of US$675 ahead of the hearing.
 
“Virtual currencies, perhaps most notably Bitcoin, have captured the imagination of some, struck fear among others, and confused the heck out of the rest of us,” Senator Thomas Carper, who chairs the committee, said in his opening remarks at the standing-room only hearing.
 
New Methods
 
Virtual currencies, or digital cash, have increasingly become a popular new way to purchase goods or services.
 
They are not regulated or issued by a central bank. They have been touted by some as an alternative currency in countries facing financial instability.
 
The most popular virtual currency by a wide margin is Bitcoin, which exists through an open-source software program and whose supply is controlled by a computer algorithm.
 
However, critics have raised concerns about a lack of regulatory oversight over virtual currencies and the fact that some of them can be transferred anonymously, raising fears that they could be used by scam artists.
 
The general counsel of the Bitcoin Foundation, Patrick Murck, told lawmakers that digital currencies offer many benefits and are not only a cloak for illegal business. However, he also added that law enforcement would have to develop new methods to investigate some criminal activity.
 
Over the past year, U.S. authorities have taken action against several players in the digital currency space.
 
In May, U.S. authorities seized two accounts linked to the Tokyo-based exchange Mt. Gox, the major operator for the Bitcoin digital marketplace, after it failed to register with FinCEN.
 
Around the same time, U.S. criminal authorities also indicted the operators of the digital currency exchange Liberty Reserve and accused the company of helping criminals launder more than $6 billion in funds, linked to everything from child pornography to software used for bank hacking.
 
In October, federal authorities shut down an online marketplace called Silk Road; users had been able to use Bitcoins to purchase drugs and hire hit men.
 
Earlier this month, a new version of the website opened for business again, raising concerns over whether authorities were fighting a losing battle.
 
Raman rejected such concerns and said the government was sending a message to criminals by taking down these organizations. “We have kept pace,” she said.

You May Like

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.