2024-06-19
Financial Integrity Newsletter – June edition
FIU Latvia publishes study on central bank digital currency
27.04.2023
Central bank digital currency (CBDC) are what many in the financial services sector view as the next innovation in money, which offers the next step in the evolution of finance. Programmable currency, retail bank accounts at central banks, and discreetly traceable digital money are just some of the ways CBDC can fundamentally redefine the existing banking and payment paradigm. These changes have important implications for financial integrity and economic crime resilience, creating both opportunities and challenges.
The newest study of FIU Latvia examines the impact of CBDC on anti-money laundering (AML) and other financial integrity and economic resilience outcomes, focusing on the digital euro project. To interface with AML, the study establishes a taxonomy of CBDC. Design features like privacy and level of programmability are also explored.
The study finds that depending on the design choices of the digital euro, AML systems may be significantly strengthened, but may also encounter new technologically sophisticated risks. The study concludes by emphasizing the need to involve all stakeholders in the review of legal, technical, and institutional preconditions of the digital euro. It is especially important that all relevant AML authorities, including financial intelligence units law enforcement are included in ongoing discussions to ensure that AML and other similar policy goals are not jeopardized, but empowered.
The study is available here:
The AML/CFT implications of Central Bank Digital Currency and the digital euro
2024-06-07
FIU Latvia and Latvijas Banka implement knowledge development activities under an EEA grant project