Identifying and monitoring of virtual currency users in banking institutions.

摘要

Virtual currency is a newer payment option for individuals or businesses to utilize for peer-to-peer transactions without the use of formal banking institutions. Certain aspects of virtual currency support the theory that it is a progression of the Informal Value Transfer System (IVTS), also known as underground banking. The most popular of all virtual currencies are Bitcoin, which was established as a peer-to-peer payment system, and Linden Dollar, which began growing in popularity because of the virtual gaming world, Second Life. Virtual currency has proven to be a positive method to transmit money and to pay for virtual and real world goods. Government regulators recognize the increase in popularity surrounding the new payment model and are trying to provide guidelines for those that wish to administer, exchange, and use virtual currency. However, virtual currency is also becoming a risky payment system because of criminals abusing the new money. Virtual currency has been linked to money laundering, fraud, and terrorist financing. Criminals are utilizing the new money for illicit activities, which puts formal banking institutions in a vulnerable state when their customers use the currency. The purpose of this paper is to investigate virtual currency, crimes, and problems associated with misuse of the money. Furthermore, this paper offers recommendations on implementing or updating processes within banking institutions for better practices to identify and monitor customer use of virtual currency. Banking institutions should consider these recommendations in order to protect bank business, the formal financial system, and most of all, bank customers.;Keywords: Dr. Shannon Johnson, Economic Crime Management, Training, Enterprise Risk Management (ERM).