BK: Standard Chartered Exec: Bitcoin HELPS Combat Money Laundering
Standard Chartered Exec: Bitcoin HELPS Combat Money Laundering
By: Brian Kelly | @BKBrianKelly | July 16th, 2015
For the last few years banks have stayed clear of Bitcoin because they feared Bitcoin and the technology behind it (blockchain) was anonymous currency for drug dealers and assorted criminals. So why is every bank NOW falling over themselves to develop a blockchain strategy? Because they finally understand that what makes a blockchain strong is traceability and that can be used to help banks to combat money laundering and illicit activities.
While its true that Bitcoin has been used by bad actors, what is NOT true is its anonymity. Every single transaction that occurs in a blockchain can be traced, in fact this is what makes the system so strong and tamper proof.
In a LinkedIn post, Anju Patwardhan – Group Chief Innovation Officer at Standard Chartered Bank makes the case that financial institutions can use blockchain technology to help with AML and KYC procedures:
“One of the biggest challenges facing financial institutions is the need to prevent their systems being used to transfer funds for criminal activity such as the drugs trade or terrorism.
Banks are investing heavily in new systems and processes to prevent money laundering and blockchain could help.
With the use of blockchain technology, each leg of the transaction can be recorded and traced, making the ultimate destination and use of the funds clearer. This means combating financial crime such as money laundering also becomes easier.”
This quote from Patwardhan is a huge reason why so many financial institutions have embraced blockchain technology – cutting costs while improving AML/KYC procedures is a no brainer for financial institutions burdened by regulations. With this type of institutional buy-in its clear that this technology is game changing.