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Why is Libra Cryptocurrency The Most Trending Thing Right Now?

Richard Marley
June 20, 2019
4 minutes read
6330

The universe of crypto revolves around an aversion to a central financial authority. The financial crash of 2008 made people skeptical of central banks. And the rising popularity of cryptocurrencies vindicates it. But now Facebook has announced to launch its own crypto coin, the Libra Cryptocurrency, which is not as decentralized as the more conventional cryptocurrencies.

Overview of Facebook Cryptocurrency

Facebook has announced that it will launch a cryptocurrency, Libra. People could send each other money over Whatsapp and Facebook Messenger, and purchase items online with it.

The reason for launching it – as mentioned in Libra’s Whitepaper – is to bring 1.7 billion people into the financial ecosystem which are not currently part of the conventional banking system.

With Facebook’s reach, it seems possible.

But it is important to know that Who is actually backing Libra?

Partners

Libra is primarily backed by the Switzerland-based Libra Association. It is also supported by the likes of Mastercard, Visa, PayPal, Stripe, eBay, Uber, Lyft, Spotify and Coinbase, among others.

Despite this strong alliance, there is a problem, trust, or the lack thereof.

If you do not trust the central bank and the federal reserve system then why would you trust Visa and MasterCard that are backing Libra coin?

This duality is obvious in Libra.

On one hand, it is using blockchain technology but it is not an open ledger, yet. This, perhaps, is to keep the network secure considering the security breaches of cryptocurrency exchanges we have witnessed in recent years.

Mark Zuckerberg on the Security of Facebook Libra Cryptocurrency

Mark Zuckerberg, the CEO of Facebook, understands security concerns. In a recent Facebook post, he specifically addressed this issue, “Privacy and safety will be built into every step… Libra will be regulated like other payment service providers,”.

The prevalent nature of Whatsapp and Messenger creates suspicion regarding the privacy and security of online transactions. Zuckerberg added;

“Any information you share with Calibra will be kept separate from the information you share on Facebook.”

What is Calibra?

Calibra is the e-Wallet or virtual wallet for the Libra coin. According to the official Facebook news source it will be available on Whatsapp, Messenger and as a standalone app.

Since there is a significant emphasis on the security of Libra’s functionality, it is unlikely for it to operate without KYC compliance and AML compliance.

How Libra Cryptocurrency is Different

Permissioned blockchain

Here is an excerpt from Libra’s Whitepaper;

“It is built on a secure, scalable, and reliable blockchain […] It is backed by a reserve of assets designed to give it intrinsic value, and it is governed by the independent Libra Association tasked with evolving the ecosystem.”

One way to look at Libra is that it is similar to Bitcoin as it is a digital currency that runs on the Blockchain, and offers smart contracts, much like Ethereum. Many are considering Libra more similar to Ethereum than Bitcoin.

Libra’s structure contains all the main features of Ethereum; the account model, generic language, gas, on-chain scaling with sharding among others.

The Good

We have already seen so much chaos in the world of cryptocurrencies that a name such as Facebook seems like a good addition. The breach of users’ private data through Facebook did not deter its two billion users. On top of that Libra is a stable-coin.

The Bad

Security is a major concern. The real reason behind the potential abuse for Libra is crooked developers. Facebook intends to allow anyone to build apps on Libra’s platform in the future. The escapade of Cambridge Analytica which resulted in the breach of 87 million people’s personal data is still fresh.

What Libra Means for the average Facebook User

If you are a happy user of payment system such as PayPal or Skrill, Libra might not mean much for you. But those people are not Facebook’s target audience.

The real market for Libra are the people sending money to their loved ones from abroad. This also includes the 1.7 billion people that are currently outside the realm of traditional banking. That perhaps is the biggest target market as far the cryptocurrencies are concerned.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

Latest News

News
CBN Issues AML/CFT/CPF Guidelines for Licencing Banks and other Financial Institutions
Overview of Facebook Cryptocurrency
How Libra Cryptocurrency is Different
The Central Bank of Nigeria (CBN) has issued guidelines to assist promoters of banks and other financial institutions in fulfilling AML/CFT/CPF standards while they apply for operational licenses.

The apex bank stated it’s for use by people and businesses requesting a license to operate as banks and other financial institutions.

The guideline is issued to comply with the Anti-Money Laundering, Combating The Financing of Terrorism, and Countering Proliferation Financing of Weapons of Mass Destruction (AML/CFT/CPF). Anybody applying for a license is obligated to consider the requirements, which are also mentioned in the guidelines.

The central bank has, for the first time, published strict standards that align its application process for banking licenses with considerations for the financing of terrorism, the purchase of weapons, and other forms of instability. Due to this, acquiring a banking license will likely become considerably more challenging and rigorous.

The CBN would be probing the shareholders of potential bank applicants more comprehensively than before, paying close attention to anyone who potentially has a history of criminal activity or links to criminals.

One significant and compelling conclusion is that applicants should be wary of penalties, especially those imposed by foreign countries and Nigerians. The outcome of their applications may be impacted, for instance, if the funders or supporters of bank clients are from nations that have already been sanctioned.

The criteria’ scope includes both fresh and pending applications. Although the rules list criteria for licensing applications, including applicability, these are insufficient explanations to reject application forms for just a banking license.

Suggested Read: CBN, NFIU to Monitor Illicit Crypto Transactions in Centralized Exchanges

Recent Posts

Blog
A Brief Insight into the AML and CFT Framework of Thailand
Overview of Facebook Cryptocurrency
How Libra Cryptocurrency is Different
Thailand has become quite a popular and well-reputed financial hub, attracting investors worldwide. Thailand has free trade agreements with more than 10 countries across the globe which is the prime reason for huge investments by business owners. Due to the influx of money into the country, criminals have also found opportunities to carry out money laundering and terrorist financing. The fraudsters are manipulating the existing laws and exploiting them in their interests.

It is estimated that 33% of the financial companies in Thailand have experienced fraudulent activities, particularly money laundering, in the previous year. In the wake of this, global financial watchdogs have termed Thailand a soft target for money launderers and instructed the government to take rigorous steps to counter financial criminals. Thai law enforcement authorities have responded positively to this warning by international monetary organizations and implemented Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) measures which have brought positive results.

Thailand – A Safe Haven for Money Launderers

Thailand is among those countries which have made its image as an entertainment hub in the past few years. This factor has attracted tourists and business tycoons from around the globe to invest in various projects. Due to the influx of money in the country, organized crime groups have started exploiting loopholes in the economic system and abusing them to carry out several heinous crimes. The global financial regulators have also highlighted the need for stringent AML and CFT measures in Thailand that are efficient enough to counter the bad actors and bring them under the law.

The criminals usually invest their black money into different sectors, particularly tourism, and construction, ultimately selling these valuable assets while converting their illicit cash into legal money. A few years back, the Financial Action Task Force (FATF) put financial sanctions on Thailand for not complying with the global money laundering regulations, urging the local law enforcement authorities to find an efficient solution to curb this menace. This is the prime reason that in the recent years, Thai Police have arrested many criminals allegedly involved in money laundering and terrorist financing while initiating legal lawsuits against them.

Financial Losses and Role of Thai Law Enforcement Authorities

In the time span of a few years, fraudsters have inflicted billions of dollars of financial losses on users in Thailand through various scam schemes. The country has also highlighted in multiple international conferences on money laundering, which ultimately urged the authorities to take decisive action against the perpetrators.

Let’s have a look at some of the cases where Police took strict action against criminals:

Gang Arrested for $23 Million Money Laundering

Thailand law enforcement authorities have arrested a criminal gang involved in money laundering activities by running different fake schemes. Police revealed that they had been tracking down the criminals for more than a year, and investigations have found that during this time span, they successfully laundered $23 million to different countries. All the fraudsters have been charged in court, where their penalties are yet to be decided.

The Chaimat Case – Illegal Logging and Money Laundering

The Chaimat case is one of the leading cases in Thailand where fraudsters were arrested for smuggling Timber wood to other countries and laundering the profit money through several channels. Thai law enforcement authorities have revealed that criminals smuggle wild species worth more than $200 million Baht every year, further spreading this illicit money into different businesses. All the criminals linked to this case have been arrested, and the case is still going on in court. The authorities have further vowed to track all the bad actors involved in smuggling and bring them under the law.

Recommendations of Thailand’s Law Enforcement Authorities

The Anti-Money Laundering Office (AMLO) in Thailand has proposed a comprehensive framework to eradicate the chances of financial crimes in the economic system. On a national level, the local government is holding several events to guide the common people to participate in seminars related to anti-money laundering.

Customer Due Diligence (CDD)

Customer Due Diligence (CDD) is the process used by financial institutions to collect and analyze users’ information. Through an efficient CDD, banks and other organizations can have their users authenticate and make a record of them, which can prove helpful in identifying criminals.

Know Your Customer (KYC)

Know Your Customer (KYC) is considered the most crucial solution to authenticate users’ true identities. The Thai government issued a report last year where it has been highlighted that the majority of money launderers are using fake identities to carry out their heinous crimes. It has been critical for all financial institutions to implement robust KYC measures to verify users’ true identities in real-time by comparing the details with the ones on their documents.

Anti-Money Laundering Laws of Thailand

The Thailand government has shown quite a responsiveness towards the increasing financial crime by implementing several new laws in the country or amending the existing laws. Under all these laws, the courts are trying the criminals, ultimately helping the government tackle the issue.

Let’s have a look at some of the rules which have presented considerable resistance to money launderers and terrorist financiers:

Anti-Money Laundering Act B.E 2542

Anti-money laundering Act B.E 2542 is Thailand’s primary law, which has all the provisions against money launderers and other financial criminals. It has been made mandatory for banks and other monetary organizations to report any transaction above $1600 to the relevant authorities. Moreover, the act also terms any attempt to invest the black money as a criminal offense which could result in imprisonment of up to 15 years.

Counter-Terrorist Financing Act Amendments

Although Thailand had the Counter-Terrorist Financing Act in the past, it lacks provisions related to the use of financial organizations and money laundering in spreading terrorism. The authorities have amended the CFT law, and all the financial irregularities resulting in any terrorist activity are termed criminal offenses.

Key Takeaways

Combating money laundering and terrorist financing is crucial to ensure the rule of law in Thailand. It is one of the growing economies in the region, and investing in AML/CFT solutions can bring positive results for financial organizations.

Shufti Pro’s AML screening solutions are the most viable option for businesses operating in Thailand to ensure compliance with global regulations and counter financial criminals. Shufti Pro’s AML solution has access to 1700+ sanctions lists and screens users’ data against them while providing results in seconds with 99% accuracy.

Are you ready to learn more about the AML/CFT solutions for Thai companies?

Talk to an AML Expert

Why is Libra Cryptocurrency The Most Trending Thing Right Now?

Overview of Facebook Cryptocurrency

Partners

Mark Zuckerberg on the Security of Facebook Libra Cryptocurrency

What is Calibra?

How Libra Cryptocurrency is Different

Permissioned blockchain

The Good

The Bad

What Libra Means for the average Facebook User

Thailand – A Safe Haven for Money Launderers

Financial Losses and Role of Thai Law Enforcement Authorities

Gang Arrested for $23 Million Money Laundering

The Chaimat Case – Illegal Logging and Money Laundering

Recommendations of Thailand’s Law Enforcement Authorities

Customer Due Diligence (CDD)

Know Your Customer (KYC)

Anti-Money Laundering Laws of Thailand

Anti-Money Laundering Act B.E 2542

Counter-Terrorist Financing Act Amendments

Key Takeaways

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Let’s prove your customer’s

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