The unlawful exploitation of virtual assets creates new obstacles in countering money laundering and illicit financial transfers, according to experts at the inaugural Intersec 2025 Policing Conference, which ended today at the Dubai World Trade Centre (DWTC). They pointed out that cryptocurrencies such as Bitcoin operate on pseudonymous networks, with users recognised by alphanumeric addresses rather than real-world identities. Certain privacy-focused coins, such as Monero and Zcash, as well as mechanisms like tumblers and mixers, make the origins and destinations of funds even more mysterious.
Addressing Crypto-Enabled Crime
Nicholas McNicholas, Senior Director of Regulatory Enablement and Enforcement at the Virtual Assets Regulatory Authority (VARA), highlighted the challenges posed by virtual assets during a panel discussion on combating crypto-enabled crime.
The rise of virtual assets has transformed financial crime globally, providing criminals with new avenues to move illicit funds and complicating anti-money laundering efforts. Certain areas, such as decentralised finance (DeFi), remain unregulated, raising concerns about ownership over peer-to-peer transactions and reduced transparency,” McNicholas stated. He added, “Decentralised often means deregulated, requiring innovative solutions to centralise violation oversight.
Balancing Innovation and Regulation
McNicholas underscored the importance of balancing innovation with regulatory compliance, particularly in Dubai, where rapid digital asset adoption has positioned the city as a global financial hub. Maintaining a safe and dynamic market for digital finance demands strict anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
Since 2022, VARA has established a comprehensive regulatory framework, requiring all entities engaged in virtual asset activities in or from Dubai to obtain a license. McNicholas noted VARA’s focus on creating a level playing field and raising awareness through extensive outreach programs.
Leveraging Technology and Partnerships
Panelists emphasized the role of advanced technologies like AI and the importance of public-private partnerships in addressing regulatory challenges. VARA’s daily updated watch list integrates intelligence from various sources, including international regulators, law enforcement, and whistleblowers. Every lead undergoes a swift initial assessment aligned with the National Anti-Money Laundering Task Force. Transactions like cash-for-crypto are flagged as high risk due to weak KYC measures,” McNicholas explained.
Global Collaboration for Modern Policing
Grant Tuchten, Portfolio Director at Intersec organiser Messe Frankfurt Middle East, stressed the necessity of international cooperation in tackling the complexities of financial crime. “This conference highlights the need for global collaboration, enabling industry leaders to share knowledge, explore innovative solutions, and build partnerships to secure the future of policing,” Tuchten said. The discussions underscored the need for vigilance, collaboration, and cutting-edge tools to stay ahead in the fight against financial crime.
