CF Fong, the founder of security services firm LGMS, told FMT it would be futile to try to trace money sent through bitcoin transactions.
“The thing with bitcoins is that you can send money from one end of the world to the other without a centralised governing body,” he said. “That is a reason why so many governments around the world are concerned over bitcoin transactions.
“There is no way to put a stop to such transactions or even to track them. This is especially useful for money laundering. There is no way to tell the origin and the destination of the money.
“Drug dealings, firearms sales and ransom payments can also be carried out using bitcoins because of the anonymity provided.”
Fong also spoke of the illegal collection of funds from the public by multi-level marketing (MLM) companies claiming to have their own cryptocurrencies.
“You need a licence to collect money from the public,” he said. “But a lot of the MLMs use the concept of ICO (Initial Coin Offerings) to gather funds. This has also added to the confusion about how cryptocurrencies work.
“Typically, their sales pitch goes like this: ‘If you missed the bitcoin rush, we have our own coin that you can benefit from.’
“A lot of MLMs in Malaysia are using this to trick people.”
It was recently reported that Bank Negara had scheduled a meeting with active digital currency exchange dealers to explain their reporting obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act.
Bitcoins can be bought and sold through the many exchanges that have been set up around the world.
Fong noted that Bank Negara was drafting policies to outlaw any such exchange in Malaysia and to prevent indications of fraud such as the launching of an ICO to collect money from the public.
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