Opinion by: CIFA CEO Mike Haley
When the cryptocurrency industry completely changed the financial world, it exuded a basic reality under the ground. Reaching record level, reported cryptocurrency scam $9.9 billion Forecasts in 2024-2025 make even reading vague.
Whether in the form of “old wine in new bottles” fraud (such as Ponzi schemes and pumping programs, or new crypto-specific fraud types such as addressing poisoning, the global fraud epidemic is working to hit the industry and undermining consumer confidence.
Criminals are increasingly misusing the fraudulent gains generated by the department in the Traditional Finance (TradFI) sector. This poses a challenge to compliance challenges for businesses that are in sync with evolving anti-money laundering (AML) rules. After all, nearly 90% of crypto registration applications in the UK Failed due to AML and fraud control.
Crypto Department abuse
In the eyes of global regulators, this abuse of the cryptocurrency sector by industries that work to clean up their image has not attracted attention, many of whom are starting to seek to regulate industries outside of AML circumference. The efforts of individual companies – such as industry scam marking tools and disruptive operations – are limited in the effects of isolation, although they may be praised.
The industry needs to take a bolder approach to data sharing of anti-financial crimes.
Cross-departmental public-private data sharing that address fraud is rapidly becoming the norm in the Tradfi field. Whether it is through mandatory anti-SCAM data sharing between Singapore’s financial services and telecom companies, or a voluntary program led by industry leaders in Australia and the UK, global data sharing is seen as one of the key defenses against global fraud.
Related: Blockchain compliance tools can cut tradfi costs: Chainlink co-founder
We can only put this global wave of crime into trouble by joining the point of the fraud value chain. As fraud adapts internationally to the new financial landscape, what is missing in this chain is the digital asset community. Bringing the community into existing data sharing efforts will not only help build a strong ecosystem, but will also benefit the industry itself.
Theoretical action
The industry should do three things.
First, the current limited use of encryption as a mainstream payment medium means that even the deadliest crypto criminals cannot exist in isolation. The growing off-road between cryptocurrencies and fiat currencies is a key intervention point in the fight against crypto link fraud. Neither side sees the entire picture, so being unable to share data will hinder efforts.
Second, using cryptocurrencies in fraud chains creates AML challenges. As regulators start biting through communication and new regulations, the industry needs to establish defenses against fraudulent gains. If there is no necessary data flow to discover and block individuals from entering their ecosystem, it must be further improved from the value chain, which it cannot do.
https://www.youtube.com/watch?v=vlicokjsip8
Third, while the willingness to deal with fraud in the digital asset community is growing, the compliance of professions within the industry is a new discipline. The industry will benefit from the experience of established fraud experts in hard data and other fields, and the type of emerging fraud is “as usual business.”
While the arguments that facilitate cross-industry data sharing to prevent crypto link fraud are clear, what measures are needed to implement this theory?
Accelerate collaboration
The UK provides a potentially welcoming policy environment for the industry to get involved in cross-departmental data sharing for the first time.
From a legal perspective, UK privacy regulator, the Office of the Information Commissioner, recently statement To be clear: “Data protection is not an excuse when addressing fraud and scams.” This is particularly relevant to recent crimes, one of which is a fraud Steal $1.2 million by serving as law enforcement The crypto wallet host induces victims to disclose personal information.
https://www.youtube.com/watch?v=T06MVWZ6NGM
Add to the latest legislative changes (use and access) form (use and access) to the data privacy regime Behavior 2025 – Crime prevention as a “recognized legitimate interest” – the shared legal argument is unclear.
Next, the regulatory vision of digital asset regulation in the UK provides carrots and sticks for fraud prevention and data sharing. The Prime Minister’s announcement on future regulations strongly suggests that the digital asset industry will be subject to the same consumer protection rules as the trade hobby sector. It is hard to imagine that British consumers without cross-industry data sharing elements preventing fraud.
Carrots are also among financial conduct authorities (and established future digital asset regulators), declaring data sharing is a key tool to combat fraud and wash it off.
Finally, the UK has a rich and established financial crime data sharing ecosystem with strong public-private, intra-industry and cross-sectoral collaboration, including through the Joint Money Laundering Intelligence Working Group. Opening these initiatives to the digital asset industry has begun and with some government and regulatory support, it may accelerate.
The crypto and digital asset community is well aware of the reputation and regulatory risks arising from fraud emergencies. However, mere recognition is not enough and efforts must not be made to remain isolated. Cross-industry data sharing is a key driver of effective fraud prevention worldwide. Given the favorable environment in the UK, it is unique.
Opinion by: Mike Haley, CEO of CIFAS.
This article is for general information purposes and is not intended to be considered legal or investment advice. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent Cointelegraph’s views and opinions.
