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The advent of Bitcoin suggested a disintermediated economy to which Internet users can take part directly. The conceptual disruption brought about by this Internet of Money (IoM) mirrors the cross-industry impacts of blockchain and distributed ledger technologies (DLTs). While related instances of non-centralization thwart the regulatory efforts to establish accountability, in the financial domain further challenges arise from the presence in the IoM of two seemingly opposing traits: anonymity and transparency. Indeed, DLTs are often described as architecturally transparent, but the perceived level of anonymity of cryptocurrency transfers fuels fears of illicit exploitation. This is a primary concern for the framework to prevent the misuse of the financial system for money laundering and the financing of terrorism and proliferation (AML/CFT/CPF), and a top priority both globally and at the European Union level. Nevertheless, the anonymous and transparent features of the IoM are far from clear-cut, and the same is true for its levels of disintermediation and non-centralization. Almost fifteen years after the first Bitcoin transaction, the IoM comprises today a diverse set of socio-technical ecosystems. Building on a preliminary analysis of their phenomenology, this dissertation shows how there is more to their traits of anonymity and transparency than it may seem, and how these features range across a broad spectrum of combinations and degrees. In this context, given implemented trade-offs can be evaluated by referring to techno-legal benchmarks, to be established through socio-technical assessments grounded on teleological interpretation. Valuable insights are drawn to this end from the various models of central bank digital currency. Against this backdrop, this work provides framework-level recommendations for the EU to respond to the two-fold nature of the IoM legitimately and effectively. The methodology cherishes the mutual interaction between regulation and technology when drafting regulation whose compliance can be eased by design. Consistently, it presents the idea of creating a transposition model between red flag indicators and techno-regulatory standards, informed by a preliminary risk-based taxonomy of the trade-offs displayed by IoM ecosystems. It suggests its implementation should be informed by an institutionalized and multi-stakeholder model of co-regulation, known in the literature as polycentric. This approach mitigates the risk of overfitting in a fast-changing environment, while acknowledging specificities in compliance with the risk-based approach that sits at the core of the AML/CFT/CPF regime.

This research paper focuses on the interconnections between traditional and cutting-edge technological features of virtual currencies and the EU legal framework to prevent the misuse of the financial system for money laundering and terrorist financing purposes. It highlights a set of Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) challenges brought about in the Internet of Money (IoM) landscape by the double-edged nature of Distributed Ledger Technologies (DLTs) as both transparency and privacy ori- ented. Special attention is paid to inferences from concepts such as pseudonymity and traceability; this contribution explores these notions by relating them to privacy enhanc- ing mechanisms and blockchain intelligence strategies, while heeding both core elements of the present AML/CFT obliged entities’ framework and possible new conceptualizations. Finally, it identifies key controversies and open questions as to the actual feasibility of ef- fectively applying the “active cooperation” AML/CFT approach to the crypto ecosystems. ispartof: pages:1-15 ispartof: Proceedings of the 3rd Distributed Ledger Technology Workshop Co-located with ITASEC 2020 vol:2580 pages:1-15 ispartof: 3rd Distributed Ledger Technology Workshop Co-located with ITASEC 2020 location:Ancona, Italy date:4 Feb - 4 Feb 2020 status: Published online

This research project focuses on the impacts exerted by the tech schemes behind virtual currencies on the EU framework to prevent the misuse of the financial system and it aims to explore legal challenges posed in the IoM landscape by the double-edged nature of DLTs as both transparency and privacy-oriented. On the one hand, it plans to identify effective legislative and regulatory measures to ensure crypto account- ability from an AML/CFT standpoint, as well as to assess the relevant role of pseudonymity. On the other hand, it pursues to discover inno- vative legal approaches to secure AML/CFT active cooperation in the crypto ecosystem(s), to the end of mitigating anonymity and traceability concerns while respecting both the value of publicity and transparency in the law and the conceptual origin of the crypto economy. ispartof: pages:1-15 ispartof: Proceedings of the 2019 JURIX Doctoral Consortium (JURIX-DC-2019) vol:2598 pages:1-15 ispartof: 2019 JURIX Doctoral Consortium (JURIX-DC-2019) location:Madrid, Spain date:11 Dec - 11 Dec 2019 status: Published online

Financial applications of distributed ledger technologies (DLTs) generate regulatory concerns. In the crypto sphere, pseudonymity may safeguard privacy and data protection, but lack of identifiability cripples investigation and enforcement. This challenges the fight against money laundering and the financing of terrorism and proliferation (AML/CFT/CPF). Nonetheless, forensic techniques trace transfers across blockchain ecosystems and provide intelligence to regulated entities. This working paper addresses anomaly detection in the crypto space, the role of machine learning, and the impact of disintermediation.