The Wolfsberg Group's FAQs on digital assets aim to align global efforts in countering money laundering and terrorist financing risks.
The Wolfsberg Group, an association of 12 global banks that aims to develop frameworks and guidance for the management of financial crime risks, has released Frequently Asked Questions (FAQs) on Digital Assets.
The document aims to create a "definitional hierarchy" of terms it deems "critical to assessing the Money Laundering (ML) and Terror Financing (TF) risks of digital assets."
The FAQs identify privacy-enhancing features of digital assets as a significant source of increased money laundering and terrorist financing risks, alleging that these risks stem from the inherent anonymity in certain cryptocurrencies, privacy-focused enhancements, and technologies such as mixers, tumblers, and zero-knowledge proofs that obfuscate transaction origins and destinations.
The resulting opacity could undermine traditional monitoring frameworks and potentially make it challenging to trace illicit financial flows, the Group states.