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ICPC justifies cryptocurrencies, other virtual assets ban

By Idowu Abdullahi

The Chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, has backed the recent ban placed on virtual assets and cryptocurrencies, insisting that the implementation of the assets are risky for implementation in Nigeria.

He indicated that contrary to the furore that followed the ban, the Central Bank of Nigeria’s action was the right one and that the implementation of cryptocurrencies poses serious legal and law enforcement risk for the country.

Justifying the action, Owasanoye maintained that cryptocurrencies guarantees similar anonymity and can easily be used as leverage for terrorist financing and other crimes across the country.

The ICPC boss made this known on Tuesday in his presentation to the Senate Committee on Banking, Insurance, and Other Financial Institutions during its hearing on the Central Bank of Nigeria’s decision to stop financial institutions from transacting in cryptocurrencies and matters arising therefrom.

According to him, the current National Identification Number registration and linking with SIM cards is a pointer to the fact that insurgents, terrorists, kidnappers, bandits, and drug merchants have used the anonymity of unregistered SIM cards to commit their crimes with relative ease.

He argued that with the NIN registration and lesser options for terrorists, cryptocurrencies may become an alternative payment platform for kidnappers, adding that such would be impossible for law enforcement to agencies to trace.

Corroborating his claim, the ICPC boss cited a case study of a current investigation by the commission on money laundering involving several hundreds of millions of naira.

“The main suspect used technology in placing money in the banking sector. A sizable amount was traced to several bank accounts but before investigators recovered some of the money, a large proportion had been made to disappear using serpentine ICT-aided transfer schemes that have so far eluded investigators.

“While the persons whose accounts were used have been located, the criminal mastermind has remained invisible and unidentified. This real ongoing case is a glimpse into the world of anonymity of virtual or digital transactions. With cryptocurrencies, the wallet of the user of cryptocurrency system only stores information or encrypted links in the blockchain where transaction confirmation can be found.

“There is no movement of any ‘currency’ in the real sense of the word. By their very nature, they provide considerable anonymity that is almost impossible to be accessed by unauthorized persons, including law enforcement authorities.”

Furthermore, Owasanoye maintained that the use for criminal activities was the most obvious risk of virtual assets and cryptocurrencies while citing reports that ‘criminally associated bitcoin addresses sent over $3.5 billion worth of bitcoin in 2020’.

“This figure includes BTC addresses controlled by dark markets, ransomware actors, hackers, and fraudsters. Most of this bitcoin will ultimately need to be laundered by these criminals, meaning it will make its way to an exchange where it can be converted to fiat currency and transferred to a bank,” the ICPC chairman said.

He also listed other risks of the use of virtual assets and cryptocurrencies to include: risk to finance of government, risk of theft of cryptocurrencies, abuse as medium of payment for hackers and ransomeware, risk of exit scams, risks of use of crypto assets for ponzi schemes, risks of tax evasion, and risk as a source of corruption-linked illicit financial flows.

He further noted that the CBN’s ability to regulate monetary policy would be lost since cryptocurrencies are issued by private entities, which are foreign, and not issued or regulated by the bank.

“It is plausible that we cannot wish virtual assets away. Central Banks in many jurisdictions are considering floating officially recognized cryptocurrencies. Whether the time is right for the Central Bank of Nigeria to follow suit is anybody’s guess, but legal guidance is needed if any fresh initiative in that direction is to have legal force,” he added.

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