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#Blockchain Could be a Powerful Tool for Shrinking Pervasive Global Money Laundering $SX $SXOOF $ $ $ $

Posted by AGORACOM-JC at 3:27 PM on Thursday, July 19th, 2018

  • Few instances in history have altered our perception of the global economy like the release of Panama Papers in April 2015 — 11.5 million leaked documents detailing instances of offshore money transfers and tax avoidance from a staggering 214,448 entities in more than 50 countries.
  • In an instant, the curtain shielding hundreds of thousands of potentially illegal financial transactions was stripped away and the general public realized our offshore financial ecosystem is not as ethical as we once may have thought.
Opinions expressed by Entrepreneur contributors are their own.

The Panama Papers are a wake-up call that fraud is an elusive and precarious threat to global commerce. Armed with the latest technological advancements, bad actors continuously find new, cunning ways to circumvent regulatory enforcement, leaving government agencies struggling to keep up. It’s estimated by the UN Office on Drugs and Crime that money laundering annually equals between 2 percent and 5 percent of global GDP, or up to a staggering $2 trillion USD. It’s a nuanced problem that requires a tailored and innovative solution. Thankfully, recent advancements in blockchain, the technology underpinning Bitcoin, Ether and other, have the potential to put an end to a generation’s worth of fraudulent practices that have, for far too long, allowed bad actors to live above the law.

Blockchain technology is best described as a decentralized and immutable ledger of information digitally stored across an entire network. If you own a computer, and you’re an active participant in the system, then you can access an entire record of interactions — from wire transfers, to bank deposits, to tax filings — that occur within the confines of a given commercial infrastructure. When a transaction is placed on the blockchain its authenticity is verified by participants known as “nodes,” which work to ensure that the network remains tamper-proof, while also mitigating the risk of falsified documents making it onto the exchange. Once approved, the transaction is viewable to the entire community.

Historically, inadequate communication between regulatory bodies has impeded international enforcement of fraudulent activity. Blockchain technology, however, is unrestricted by jurisdiction, making information sharing, money transfers and cross-border traceability a seamless process. I spoke about this topic with several industry experts and they provided some very valuable insight. Antonio Romero, co-founder and Technology Solution Architect of Orvium, argues blockchain will soon facilitate an open dialogue between government agencies regarding how to synchronize efforts in a post-Panama Papers world, instituting international protocols to flag fraudulent behavior regardless of jurisdiction.

While this transparency certainly bodes well for progress in global enforcement, many industry experts argue that blockchain’s anonymity prevents it from being an unequivocal answer to many of the problems highlighted by the Panama Papers. Yes, blockchain transactions are viewable to the general public, but only under the guise of public or private “key,” which is a long, indecipherable collection of letters and numbers with no distinguishable correlation to the user it references. This presents a serious obstacle to widespread integration of the technology. How can regulators possibly institute ethical compliance on the blockchain when they can see, but not identify, instances of fraud?


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