Chapter 5.

Conclusion and Recommendation

5.1 Overview
By going through this research it can be concluded that nowadays the cryptocurrency acts as a
digital asset for any individual or any organization, where they can buy or sell these assets on the
digital platforms by using digital coins like Bitcoins, Ripple, Ethereum, Litecoins and more.
Although it is monitored by using the block chain technology , there is always a threat of money
laundering by the use of cryptocurrencies. These types of activities are increasing day by day
throughout the globe, especially in developing countries like the UK. These type of activities are
carried out by some state or non state actors like smugglers, hackers, cyber criminals, terrorists
and others by using some cutting edge technology softwares and malwares like Renbridge for the
purpose of breaching the bank accounts or any digital assets of any individuals and also to
launder the huge amount of crypto currencies for the purpose to use it in illegal activities. This is
posing a major threat to the GDP of countries like the UK and resulting in negative growth for
the nation. It also emerged as a threat for the safety and the security of any individual. Although
there are lot of activities are carried out by the UK’s government by forming laws like ‘Money
Laundering Regulations Act 2017’, ‘Money Laundering Regulations Act 2019 to regulate the
use of cryptocurrencies and also to cease the activities of terror funding and other activities of
money laundering but still the problems and the threats related to the money laundering activities
using the cryptocurrencies are same.
A person can use the DeFi platforms like ‘Zengo’, ‘Bitgo’ that are encrypted and allow the users
to control their digital assets. It uses digital block chain technology for keeping secure the digital
wallets and transaction activities of users. In spite of this people face theft issues on these
platforms and also there is a significant threat to their safety and security. It can be deduced that,
despite the use of smart technologies in order to stop the digital crimes by using the digital
currencies, there is still a lack of efficient technology to stop these kinds of activities. Still there
is a continuous rise in cases of money laundering. Even the use of AML programmes and
framing rules and regulations and laws in this regard have not been able to put a stop to these
activities. This has become a significant threat for the growth and development of the UK. Thus
it becomes necessary for the country to take effective steps in this regard by identifying the
loopholes in rules and regulations in this context and also there is strong need to stop the use of
hightech softwares like Renbridge.
5.2 Linking with Objective
This research work gives a better insight about the cryptocurrencies and their use for the positive
and negative purposes. Basically the research revolves around “Analyzing the Use of Money
Laundering by Using the Cryptocurrencies and also its impact on the GDP of the UK”. Also it
involves the investigation of all the aspects of money laundering by using the cryptocurrency that
is resulting in the negative growth in the GDP of the UK. To achieve this, a detailed insight has
been provided in the research work to understand all the factors and terminologies associated
with the concept of money laundering using cryptocurrencies. With the rise of technology,
people have increased their interest in using the cryptocurrencies and use them in trading on the
digital platforms for the sole purpose of getting maximum profit (Albayati et al., 2020). Some of
the popular currencies are bitcoins, ethereum which the investors buy and sell when the shares in
the international market rises. For this purpose they are also using some DeFi platforms where
they keep their digital assets in the form of cryptocurrencies and also it acts as an effective
medium for buying and selling the shares of the companies by using the digital coins.. These
platforms use block chain technology and they are fully encrypted that allows users to secure
their digital wallets and assets in the form of cryptocurrencies (Liu et al., 2022). The use of DeFi
platforms are more in countries like the UK. It is to be noted that despite the platform being
encrypted, there are a number of theft issues faced by the users so it is not as secure for the users,
also there is an absence of tax legislation on this platforms till now in the UK which makes easier
for the criminals to commit the digital crimes and money laundering activities. It can be deduced
by this research that although cryptocurrencies can be used as a medium to gain maximum
profits but at the same time it has a huge potential to negatively affect the growth in the GDP of
the country. There is a rapid increase in criminal activities like money laundering in the UK. This
research briefly discusses the major aspects of money laundering by the use of digital currencies
in the United Kingdom. The possible causes which can be deduced from this research can be the
unrestricted use of the hightech softwares and malwares like Renbridge by the anti social
elements like the smugglers, terrorists, cyebrcriminals and more. The research has found that
there is a presence of rules and laws in order to regulate the use of digital currencies like POCA
2002, MLR act 2017 and 2019, but still they are not effective to completely control the money
laundering activities on digital platforms. This research work finds necessary measures, like use
of the AML program, which is being implemented by the countries to overcome this threat.
5.3 Limitation
This research has briefly explained the impact of money laundering activities by using
cryptocurrencies. It has explained the necessary laws which are brought by the UK government
to overcome these issues and found that these measures are still not able to fully control the
problem. However, this research has not mentioned the effective substitution of all these
measures. Also there is no mention of effective measures to stop the use of softwares like
Renbridge by some digital criminals. Also it has been mentioned in this article that some DeFi
platforms are also vulnerable for the attack of the hackers and terror elements which not only
poses a threat to the digital assets of the users but also it is threat to their safety and security. This
research work lacks the effective solution to ensure the security of individuals who use these
platforms and also to stop the activity of the hackers and others to breach the platform.
5.4 Future Scope
To effectively control the money laundering activities with the use of cryptocurrencies and to
eliminate the use of it by the anti social elements, there is a strong need to identify the loopholes
within the system to control the activities and there is a need to find effective ways to cope with
this issue. This research has explained the measures and steps taken by the authorities of UK,
through which it can be easily deduced that after the ineffectiveness of the present laws and other
measures in this regard, what other steps or necessary measures could be taken which could
effectively solve this problem of money laundering. This report has a brief discussion about how
these activities are affecting the nation’s GDP growth. Using the information given in this
research, future measures can be taken to effectively control the criminal activities of money
laundering and false use of cryptocurrencies. Also there is a need to have a proper tax legislation
to control its use in the activities like terror funding.
5.5 Recommendations
Use of cryptocurrencies can be profitable for any individual or any organization (Allen and
Bryant, 2019). It can even contribute to the GDP of the nation but its improper use for activities
like money laundering can have a negative impact on the nation’s growth. Also it can be a threat
for the safety and security of the individuals who are using it. To put a stop on this nations like
UK has to take some other necessary steps which can be-
Bringing KYC Norms
Inducing the KYC norms in this context can help to control the use of money laundering
activities (Dupuis and Gleason, 2020). KYC is designed to provide protection against corruption,
money laundering, fraud and terror funding by identifying the identity and nature of the users
and also to qualify that the source of funds is legitimate or not.
Following the FATF Guidelines
FATF which stands for the Financial Action Task Force, which is a watchdog to chaeck any
anctivities like terror funding and money laundering, has made certain guidelines for the nations
where trading with cryptocurrency is done. The UK should follow those guidelines to control the
use of cryptocurrencies in money laundering (Haq et al., 2021).
Enforcing New Technologies
Countries like UK has to consider the use of better cutting edge technology based on the block
chain methodology which provides better security from the influece of hackers, terrorists and
other state or non state actors (Goudarzi et al., 2022).
Enactment of Data Protection Law
Data processing for the purpose of stopping money laundering has great importance. Better IT
solutions can help the fintech companies and individuals in running their business with full
transparency (Davradakis and Santos, 2019). The UK needs to enact data protection laws as a
necessary step to prevent the money laundering activities by cyber criminals and also to protect
the DeFi platforms for the users. Also there are some laws already in effect in the UK, the need
is to properly implement them on ground level by proper modification if needed.
Identification of Virtual Assets
Also there is a need to identify virtual assets and regulate them in order to prevent money
laundering.
In addition to all these steps, the UK should take action against the use of some high
technologies like Renbridge which is widely used by the hackers and other antisocial elements
for the money laundering purposes by using cryptocurrencies (Cong et al., 2022). And make the
existing laws more strict and ensure its better implementation to put a stop on these kinds of
activities.
Theme 5: Investigation of Impact of Money laundering with crypto currency
As mentioned ahead that the cryptocurrencies can be used in some activities like terror
financing, tranfer of money and other money laundering activities. With the rise in its popularity
people’s interest is also rising in the use of cryptocurrencies and they are using it in digital
trades.Its use has increased if we talk about the last two years during the Covid times. They buy
the cryptocurrencies like Bitcoins, Ethereum and others and sell them after the increase in share
by using the digital platforms. This is to be noted that although it can be profitable for a great
section of the market, many people have increased interest in investing in cryptocurrencies and it
has the potential to make anybody rich overnight but unfortunately it is also being used as a way
for money laundering purposes. As it is very difficult to track the individuals who are indulged in
trade with cryptocurrencies, this leads to the increase in the activity of money laundering in the
form of trade. Also there is a lack of taxation laws when it comes to controlling money
laundering activities when we talk about the UK. There is a huge negative impact of money
laundering on the GDP growth of the UK. In spite of the presence of rules and regulations
already in force, cases of money laundering are still prevalent in the region and also outside the
country too which is decreasing the growth of GDP of the country. It reduces the per capita
income of the country by reducing the assets of an individual of the country. Day by day the
number of cases of attacks by cyber attackers are increasing despite the presence of laws which
is resulting in the huge financial losses which are occurring due to thefting of the high valued
digital assets in the form of cryptocurrencies on some digital platforms. DeFi platforms are
prominently used in the UK. It uses the block chain technology in order to encrypt the platform
and make it user friendly by allowing the users to keep their digital assets irrespective of the
identity of the individuals. However there are also cases of theft being faced by the users. This is
a major concern for the UK to control these kinds of activities.
Discussion
The role of cryptocurrencies in the global economy has raised in the global economy. It has also
a major contribution in the GDP of the nations since a huge number of people are using these
currencies for digital trading and creating digital assets. Although the system of cryptocurrencies
are operated by blockchain technology and being used by a number of individuals or even
organizations in selling, buying and transferring the digital asset. However it is not secure for the
users and also being used other than the trading activities. Talking about the UK, there is a huge
rise in cases of money laundering involving the use of cryptocurrencies. Also it is being used in a
number of other criminal activities like transfering of illegal funds through unauthorized
activities. The most prominent is the terror funding which is being used by the state and non state
actors to carry out a number of antisocial activities. According to the data provided above there
is an increase of illicit activities involving the cryptocurrency transactions by 3.37% in 2019
which is 0.15% increase in 2021. All these activities affect the growth of countries like the UK.
Although a number of legislations are framed in the UK in order to control these kinds of
activities and to bring transparency in the digital economy. Some of these acts in this regard are
POCA 2002, Money Laundering Regulation Act 2017 and 2019. Recently, the UK has amended
its new law which is the “Cryptocurrency Laws and Regulations 2023”. This amendment has
been done on the recommendations of the Crypto crime report of 2022. Moreover, the FCA has
identified different forms of the crypto assets and also it has extended its guidelines to fall in the
regulatory parameters which is being developed by the FSMA 2000. In addition to this the FCA
has also warned about the risks of cryptocurrencies, it is especially concerned for the huge
number of investors who are investing in the cryptocurrencies and who are at the risk of losing
all the money due to the unpredictable attacks of the cyber criminals and other anti social
elements. All this data and information clearly mentions the risks posed by the money laundering
activities by digital transactions in the UK. It is to be noted that these activities are still prevalent
in the UK and the number of cases of thefts and illegal trade are rising. These activities are also
posing a threat to the safety and security of the individuals of the UK who are involved in the
transactions by using the digital currencies. These activities are difficult to control as there is a
lack of control on the use of some high technology softwares and malwares like the Reinbridge
which is being used by some non-state actors and also some people who are involved in the
illegal activities. These antisocial elements are out of tracking as the system is end to end
encrypted. There is a strong need to implement some strong laws on ground level.
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