29th December 2017
While still relatively new, cryptocurrency is growing in popularity, and with it comes the increased potential to hide fraudulent activity. However, according to recent reports, international governments are now setting their sights on this digital currency as the clampdown on tax evasion intensifies.
The growth of cryptocurrency
As the digital world becomes increasingly integrated into our everyday lives, it’s no wonder that this decentralised tradable digital asset has grown in popularity. However, to date, cryptocurrency has attracted a rather sinister clientele. Without a central authority to monitor activity and with transactions increasingly difficult to trace back to an individual, it’s no wonder that the likes of drug dealers favour the use of Bitcoin and other such cryptocurrency.
While these digital exchanges are still relatively small in comparison to traditional methods, the fact that growth in cryptocurrency is occurring means that authorities need to stay ahead of developments. This includes ensuring the right regulations are in place to prevent fraud, and it would appear that the UK and the EU are leading the way.
The Treasury and EU governments have announced plans to regulate cryptocurrencies in order to ensure they fall within anti-money laundering and counter-terrorism financial legislation. This comes following concerns that digital currency could also be used to evade taxes and facilitate cybercrime.
This strategy will see online trading platforms carrying out due diligence tests on customers in order to identify and report suspicious activity, with traders also set to lose the anonymity they’ve previously benefitted from. This announcement certainly had an impact on Bitcoin trading, which dropped from a record high of $11,800 to $10,554 following the news.
Authorities eliminating options for fraudsters
While some commentators, including the deputy governor of the Bank of England, Sir John Cunliffe, claim cryptocurrency isn’t yet large enough to be a threat to the global economy, this latest announcement really shows that authorities are seeking to remove any hiding place for fraudsters. And as governments worldwide continue to invest in action against tax evasion and money laundering, we can only expect to see further plans introduced to prevent such behaviour.
For recruiters placing contractors overseas, the potential compliance risks are increasing, particularly with the possibility of facing prosecution for the activities of third parties now on the cards. But we all know that the global contractor placement arena is a profitable one, so how can you protect your firm from these risks? By speaking to an expert in international contractor management solutions.
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