Home / Blockchain / Drug barons, rogue states and terrorist groups use banks – can they block them?

Drug barons, rogue states and terrorist groups use banks – can they block them?

Fierce reports from regulators have accused traditional banks of inadvertently helping "drug bosses and rogue nations" – allowing them to commit money laundering, make questionable transfers and evade economic sanctions and taxes.

It's a problem that goes back decades. In fact, a 1989 New York Times article estimated that $ 100 billion in revenue from cocaine sales in the United States alone would end up in the hands of a violent drug cartel in Colombia. The advent of electronic wire transfers was to blame, with a political warning: "Bankers are unconsciously and casually and lazily act in complicity by failing to do enough".

Come 2012, HSBC was in hot water and fined $ 2 billion because it had failed to prevent criminals from using its infrastructure. His division in Mexico had inadequate control of money laundering, with a report by the US Senate Committee accusing him of being reluctant to close suspect accounts. The report also concluded that it had circumvented strict rules for doing business with Iran, North Korea and Burma, which the United States calls "rogue states". Two of the HSBC divisions have found alterations in transaction details to remove references to a prohibited nation. Furthermore, it was claimed that HSBC had links to terrorist financing organizations.

A blockchain technology startup focused on these examples – as well as many others – as evidence that current regulatory regimes do not work as well as they should, and compliance is uneven. Ivy Network states that KYT (know-your-customer) and KYT (know-your-transansaction) checks on its platform have the potential to be better than those currently used by banks, speeding up transactions without increasing costs or reducing transparency .

Online and mobile banking, automatic currency conversions and the emphasis on transaction clearance have been great news for ordinary consumers who want simpler payments, but have sometimes been a haven for criminals. Ivy Network's cryptocurrencies present a "promising new frontier for the future of digital payments" – with blockchain technology that simplifies regulatory compliance and prevents serious violations for banks in the future (as well as fines that accompany eye).

By the way: KYC and KYT

KYC checks are often used to help both parties in a transaction ensure that they comply with regulatory authorities and avoid intentional or unintentional involvement in major financial crimes such as money laundering. For financial institutions, this normally involves verifying customers' identity documents, checking their name against blacklists, examining their risk of committing crimes such as identity theft or money laundering, and monitoring of transactions for suspicious activities.

Meanwhile, KYT checks provide detailed details on individual transactions, ensuring compliance with ever-stringent financial and legal obligations.

According to Ivy Network, it is able to offer 74 "data points" and more than 120 "to your data". Although society recognizes cryptocurrency as "unknown to many people and traditional institutions", it believes that the transparent and complete nature of the blockchain infrastructure can give everyone greater peace of mind.

"Better than other digital currencies"

Ivy says it offers several advantages over traditional payment networks, in addition to rival cryptocurrencies. Its infrastructure makes it possible to incorporate more KYC and KYT data in a transaction than outmoded financial institutions, which in theory can make it more difficult to carry out illegal activities for all parties. In an attempt to reach these legacy brands, the startup states that its systems can be integrated into existing banking systems and incorporated into software used for accounting purposes.

From a cryptocurrency perspective, Ivy Network, Ivy's flagship product, believes it offers "architectural improvements" compared to Ripple, its closest rival. This is because KYC and KYT checks, as well as anti-money laundering mechanisms, are not included in Ripple's core design and, in any case, these data are not associated with the digital currency.

A token generation event for Ivy, the native token on the network, took place in the first half of 2018. Looking back at the rest of the year, it is building a live test network and working to tighten key partnerships with financial institutions interested in trying out his beta product. The conversions of Fiat and Crypto went to live with IvyPay, paving the way for a minimum vital product to be fully developed.

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