Counter Terrorist Financing is an extremely important part of crypto regulation that aims to stop criminals from using crypto to avoid anti-money laundering regulations.
In some cases, crypto has something of an image problem when it comes to anti-money laundering practices. (AML) Some criminals and terrorist organizations use the world of crypto and its somewhat unregulated status to get around money laundering laws.
Therefore, Counter Terrorist Financing (CTF) is designed to ensure that virtual asset platforms collect the necessary amount of information on the comings and goings of the platforms.
KYC, for example, is a requirement placed on many crypto exchanges and platforms that requires them to know who is engaging with the platform and, in some cases, verify their identity and address.
CTF is the additional responsibility placed upon platforms that require that they keep extensive records on the movement of assets on their platforms.
CTF regulation also enforces that platforms do not engage in transactions with high-risk business clients.
Why Does Crypto Need CTF?
One of the key things that makes crypto so useful to millions of people is the same thing that makes it useful for criminals, it’s essentially borderless.
Being able to move virtual currency across borders is extremely attractive to criminal and terrorist activities for a variety of reasons. However, it’s also important to note that the vast majority of crypto users do not use crypto for this or any other illicit purpose.