Image credit: Getty Images
December 14, 2020
Central Bank Digital Currencies: The Threat From Money Launderers and How to Stop Them
Digital currency appears to be the future of money. Efforts to merge monetary policy and instruments with computer-science-driven financial technology are gaining momentum globally. Central banks in large and small economies alike are proposing to revamp their monetary systems by deploying new types of digital tokens that would be managed by a single authority and designed for wide-scale retail use. Unlike independent cryptocurrencies such as Bitcoin, central bank digital currency (CBDC) has a high chance of national adoption precisely because it would be issued by a nation’s monetary authority, with its value backed by government fiat and its use encouraged by public policy.
Digital currency appears to be the future of money.
Any large economy that builds and deploys a CBDC is likely to encounter new financial crime risks. Compared to physical cash, CBDCs will in certain respects make it easier for regulators to fight money laundering, and key technical aspects of CBDCs will hinder some traditional illicit financial techniques. But CBDCs will nevertheless be a tempting target for bad actors, both state and non-state, who will adapt their methods accordingly. In particular, the unique technical features that CBDCs will add to fiat money—such as wallet programmability and microtransactions (the ability to transact at volumes below a penny)—will enable more intricate money laundering schemes.
Read the full article in Lawfare.
More from CNAS
-
Volkswagen, then Stellantis: Billions for battery plants, but little on mines for raw material
Commentary
Canada’s critical minerals strategy has large aspirations, but these plans will go unrealized without a higher degree of focus and funding....
By Rachel Ziemba, Giancarlo Da-Re & Matthew Funk
-
Incentivizing Whistleblowers to Combat Sanctions Evasion
Commentary
Although misguided patriotism drives many Russian intelligence officers to support President Vladimir Putin’s war machine, money can persuade sanctions-evasion enablers — espe...
By Alex Zerden & Arshan Barzani
-
The Role of Investment Security in Addressing China’s Pursuit of Defense Technologies
Congressional Testimony
Summary of Testimony Chairman Bartholomew, Vice Chairman Wong, and Commissioners, thank you for the opportunity to provide testimony before the Commission.1 A summary of the r...
By Emily Kilcrease
-
The U.S. Needs an Economic War Council for China
Commentary
This week, Taiwanese President Tsai Ing-wen met with U.S. House Speaker Kevin McCarthy at the Ronald Reagan Presidential Library in Southern California. It’s the second time i...
By Charles Edel & Edward Fishman
