DefinePK

Abstract

The emergence of an algorithm-based currency mechanism, known as cryptocurrencies, has raised alarms on account of the risks associated with money laundering and terrorism financing. Besides its merits, the decentralized nature of cryptocurrency provides ample opportunities for terror outfits and crime syndicates to park, move, or launder their illicit proceeds by keeping anonymity in transactions due to lack of administrating or central authority to supervise or authorize the legitimacy of transactions. Such issues compelled nation-states to strengthen their Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regimes to ensure their physical, economic, and national security, either through regulations or outright prohibition. Pakistan adopted the latter approach and criminalized any transaction in cryptocurrencies; however, in the absence of any specific legislation, authorities face difficulties in the prosecution of crypto-related offences. This study used a qualitative method of analysis to examine howcryptocurrencies functions, how they facilitate crime syndicates and terrorist financiers to launder their finances, and what measures are required to curb this aspect of illicit financing.