How to deal with money laundering in the cryptocurrency market? Interview with Senior Partner at Thompson&Stein Artur Kuczmowski

How to deal with money laundering in the cryptocurrency market? Interview with Senior Partner at Thompson&Stein Artur Kuczmowski

Absence of the legal field for the blockchain technologies creates many problems, including those related to scammers. According to the BBC, in 2017-2018 alone the cryptocurrency market laundered over $1.2 billion.

Artur Kuczmowski, a Senior Partner at Thompson&Stein, believes that KYC and AML procedures will help to fight fraud. In his interview for Blockchain & Bitcoin Conference Belarus, Artur told about these procedures for the crypto market and whether there are other ways to prevent money laundering in the sector.

Artur Kuczmowski is a lawyer with 15 years of experience focusing on the legal and tax consulting of crypto startups and companies that introduce blockchain in their business.

Interviewer: Blockchain & Bitcoin Conference Belarus (BCВ).

Speaker: Artur Kuczmowski (А.К.).

BCB: Why is the cryptocurrency market considered to be the beneficial environment for money laundering?

A.K.: This is due to the fact that cryptocurrency is not connected with any particular person and depends only on the private key of the account. Fears arise because of the anonymity of all transaction participants.

Cryptocurrency is decentralized. It means that there is no single organization that has information about all the transactions taking place in blockchain. While electronic currencies remain outlawed, they will be perceived as favorable means for money laundering.

BCВ: How is the crypto market combating money laundering?

A.K.: Most trading platforms, exchanges and wallet suppliers have already accepted or are going to accept KYC and AML procedures. In the cryptocurrency sector, they are similar to those working in the banking and financial sectors. It is also very important that every person involved in the ICO should be familiar with these protocols. Thus, it is possible to gain trust of potential investors.

BCB: Why do cryptocurrencies require regulation?

A.K.: Rules are necessary. It was proven by Estonia, Malta and Switzerland, where regulation helped to develop the market without limiting it in some way. It helps, since companies know the conditions to work in. Clear legal norms of the cryptocurrency market will allow the market participants to cooperate with banks and other financial institutions more effectively.

BCB: Please tell us about the most prominent case of money laundering on the cryptocurrency market that you have faced.

A.K.: Most of these cases are confidential, because they are related to the business activities of our clients. The main thing for us is not to punish, but to prevent such situations by setting specific procedures and the reporting standards. The blockchain technology is an excellent tool in such cases.

I believe that the biggest problems of the market relate to the procedures that allow clients' money to be debited and credited very quickly, especially from and to the high-risk countries.

BCB: Could you give cryptocurrency exchanges and other services three tips on avoiding money laundering on their platforms?

A.K.: It's quite difficult to give three specific tips. Preventing money laundering is a long-term process that involves comprehensive solutions. But, in my opinion, it is important to follow three rules.

  • Don’t be afraid of losing your audience. Some of our clients were afraid that the AML, KYC rules could lead to the loss of their customers. It is not true. Reliable and most profitable customers will stay with you because of your responsibility. They will know that their money is safe.
  • Understand your customers. Collecting information about the psychological characteristics of the audience, its sources of income, types of activity and other things will help you to find out what risks potential customers are afraid of. This data can be used to understand the needs of the audience and, thus, improve the quality of your products.
  • It is better to prevent rather than correct. Try to understand the risks and problems by controlling the entire process that takes place within your platform.

BCB: What will your presentation at Blockchain & Bitcoin Conference Belarus be dedicated to?

A.K.: I know that the KYC procedure is against such technologies as blockchain. My report will focus on two aspects of this issue: whether it is possible to implement effective KYC procedures without losing customers, and which information about your audience you should know in order to prevent fraud.


To listen to the report of Artur Kuczmowski and other speakers register for Blockchain & Bitcoin Conference Belarus, which will be held in Minsk on October 10.

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