Digital embrace

Digital currencies are an inevitability and do not pose any additional risks so far as money laundering and the financing of terrorism are concerned.

So says Sade Jemmott, General Counsel for the Barbados-based financial technology company, Bitt.

Delivering a presentation titled “A Whole New World! Anti-Money Laundering in the Digital Currency Era”, at the Barbados Bar Association’s Conference yesterday morning at Sandals Royal, she maintained that in respect of digital currencies the benefits afforded to the financial system are undeniable, noting it is no longer a question of whether such currencies will be used, but rather when.

She went further, contending that with digital currencies there is a level of transparency that did not previously exist, and added that those who embrace the technology, including lawyers, will benefit.

“I’ve had one law firm for example express interest in accepting digital currency and I think that’s progressive and it is an opportunity to be cutting edge and to be ready – ready to adapt your practice to where the world is going. Digital currencies are an inevitability at this point in time,” she contended.

Putting a case for greater use of digital currency in this country, Jemmott noted that it is estimated that some 70 per cent of business in Barbados is conducted in cash, which she hinted could pose more challenges in respect of money laundering than a digital currency would.

She explained that cash affords the person using it a certain level of anonymity, given that when that cash is paid you cannot tell where it has originated. She indicated that there are no safeguards as with the use of digital currencies.

“If you take mMoney for example, it is a closed system with known actors. In order to get onto exchanges, in order to access digital currency in the forums that it exists on, you have to go through an entity that has very high KYC [Know Your Customer] standards to even get an account to access it. It means then that typically, every actor on that system, on that network, is a known player, which is a marked difference from an economy that is primarily cash based,” she added.

Bitt’s General Counsel went on to argue that cash in a traditional banking system has and continues to be used for nefarious activities, including money laundering and financing of terrorism. She argued then that digital currencies do not present any special vulnerabilities that did not already exist or even more so to a greater extent, in our largely cash based economy.

“Laundering money via a technology that adds your transaction details to an immutable chain, is not a good way to launder money and smart criminals know that… Remember how the technology works - block chain strings together the transactions into an immutable chain, which means that there is a paper trail that never disappears,” she stated. (JRT)