MONEY LAUNDERING, TERRORIST FINANCING AND TAX EVASION USING CRYPTOCURRENCIES
MONEY LAUNDERING, TERRORIST FINANCING AND TAX EVASION USING CRYPTOCURRENCIES

Summary/Abstract: In the modern era of technology services, cryptocurrencies have been extensively used for illegal activities such as money laundering, tax evasion and terrorist financing. An essential supposition in trading and owning cryptocurrencies is the principle of anonymity, which may range from complete anonymity to pseudo-anonymity. The anonymity principle, as it will be shown in the paper, enables cryptocurrency potential abuse for criminal purposes, obstructs proper transaction supervision from tax authority and eventually may lead to “clean cash” generated in an illegal way (Houben, Snyers, 2018). This paper gives an overview of the negative aspects of cryptocurrency financial activities and elaborates on the ways of preventing malpractice related to their use, all from European Union point of view. The paper aims to provide possible ways of preventing illegal financial cryptocurrency transactions. In order to do that, it is necessary to analyze the current European legal framework, i.e. the Fifth Anti-Money Laundering Directive, which represents a central legal instrument in preventing the use of the European Union financial system with the purpose of money laundering and terrorist financing. Inter alia, the analysis of the recommendations of the most relevant financial authorities involved in creation of financial politics on the same level will be elaborated on putting a special emphasis on the implications of preventing cryptocurrency financial crimes.

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