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The Council of Europe, the region’s human rights and democracy advocacy organization, has called on all member countries to crack down on digital asset money laundering.

The council was formed in the wake of World War II to uphold democracy, rule of law and human rights in the region. It has specialized committees which deal with specific issues under its mandate, including Moneyval, through which it issued the warning in a recent 38-page report. Moneyval focuses on anti-money laundering and curbing the financing of terrorism.

In the report, Moneyval acknowledged that the emerging virtual assets sector and the increasing use of digital currencies is becoming a significant challenge to combat money laundering since the traditional gatekeepers have little control over the sector. And while European authorities have made great strides in monitoring this sector, rapidly-emerging subsectors such as DeFi have presented new challenges.

One of the biggest impediments to enforcement of AML and CFT regulations is the cross-border nature of most digital asset entities and networks.

“Supervisory co-operation in this field is at its very nascent stages, and is not yet keeping pace with the rapid evolution of technology,” Moneyval Chair Elżbieta Frankow-Jaśkiewicz noted.

“It is well known that money launderers have been abusing cryptocurrencies from their inception a decade ago, initially to transfer and conceal proceeds from drug trafficking. Nowadays, their methods are becoming ever more sophisticated, and larger in scale.”

Frankow-Jaśkiewicz said digital assets are being used to launder proceeds from fraud and corruption and for tax evasion, noting that there are some smaller digital asset projects that are being created for the sole purpose of laundering. The larger projects are seeing heavy market manipulation, “which is a major predicate offense for money laundering.”

Frankow-Jaśkiewicz pledged that Moneyval will continue to strengthen its working methods and priorities to help its members tackle digital asset money laundering more effectively. It has also partnered with many other agencies across Europe to enhance its ability to clamp down on this vice including the Financial Action Task Force (FATF).

Watch: CoinGeek New York presentation, Blockchain as a valuable tool for law enforcement

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