Crypto asset service providers or virtual asset service providers are natural or legal persons that offer the following services:
Exchange services between fiat and virtual assets
Transfers of virtual assets
Custodian wallet providers offering safekeeping and administration of virtual assets
Crypto assets are easily accessible, transferable and exchangeable from almost anywhere around the world. Crypto asset providers are exposed to criminals that may use cryptocurrency mixers to conceal the proceeds of illegal activities before transferring them into a regulated crypto asset provider. Additionally, the use of decentralized exchanges can make it difficult to trace funds that may be associated with criminal activity.
The crypto asset industry however, is not effectively regulated like traditional financial institutions. In some countries there are no specific regulations in place to address money laundering in the crypto industry. In others, regulations have been implemented but as not as comprehensive as those in place for traditional financial institutions. The lack of regulation creates opportunities for criminals to launder money.
