is set to launch in 2020, but it\u2019s already facing a lot of serious concerns from many people and governments around the world. Some of the most serious concerns that policymakers have about Libra are the privacy problems that it could bring and how it can be harnessed by criminals for illegal activities, such as money laundering. <\/span><\/p>\nCan Be Exploited for Money Laundering<\/b><\/span><\/p>\nLibra brings a lot of implications to anti-money laundering laws. Facebook has to secure a lot of verification details via an online form for users who want to start using Libra and set up a Calibra wallet, which includes a government valid ID. The problem with this kind of approach is that Facebook will probably have millions of potential users from all over the world, how, then, are they able to authenticate the information provided by the users? <\/span><\/p>\nThis is the same kind of issue that plagued the Liberty Reserve that operated in Costa Rica back in 2013. Liberty Reserve is a digital currency that was exploited by money launderers to transfer billions of worth of assets until it was shut down and was considered as the biggest money-laundering scheme in the US. <\/span><\/p>\nLiberty Reserve works the same way as PayPal although they\u2019re using their own digital currency. Users are allowed to register and transfer money to other users using only a little information, such as name or email address. What made Liberty Reserve vulnerable to money launderers is that it never made any efforts to very the identity of their users, which made it ideal for illegal activities. <\/span><\/p>\nLiberty Reserve was also known for using unlicensed and unregulated third-party exchangers. You transfer money from a bank to a third party exchanger and it will convert your real money into digital currency and will be then deposited to your Liberty Reserve account. Liberty Reserve also didn\u2019t put any limits on the size and number of transactions users can make. All transactions in Liberty Reserve are also completely irrevocable. <\/span><\/p>\nAlthough it\u2019s safe to say that Libra is backed by a number of big-name companies and organizations from all over the world, it\u2019s still open to the same problems that plagued Liberty Reserve. Because of its structure and grasp, once it\u2019s operational, Libra could enable a massive scale of money laundering scheme. <\/span><\/p>\nTo make things worse, the Libra Association also didn\u2019t give specific or technical details on how they can prevent criminals from using the new cryptocurrency for money laundering. One can only hope that they\u2019ll be able to figure something out. It\u2019s an extremely difficult task since Facebook has a very large global user base, and differentiating good from bad transactions can be quite a challenge. <\/span><\/p>\nIf it\u2019s used for a money-laundering scheme, it\u2019ll be very difficult to stop. No amount of legislation will be able to solve the problem since each country has different views and understanding about cryptocurrency and ways to regulate it. Regulators must come up to speed with Libra and its blockchain technology to find out how to mitigate its risks and weaknesses. By then regulators should be able to address potential money laundering problems before they happen. <\/span><\/p>\nBut until that happens, money laundering problems will continue to escalate once Libra becomes live especially with the number of digital channels that are now available and the ease of moving money around in our modern financial system. And, if you add into the mix the number of money laundering enablers (with Facebook being the biggest enabler of all) that\u2019ll surely take advantage of Libra; making the war against money laundering even more difficult to win. <\/span><\/p>\nCan Facebook Stop Money Laundering Once Libra Launches?<\/b><\/span><\/p>\nPreventing money laundering using Libra is such a daunting task especially with the size of the user base that\u2019s expected to use it. Aside from that, weeding out the real transactions from laundering can be very difficult since there are users who are probably going to use multiple accounts. <\/span><\/p>\nGenuine users will also be hesitant to continue using Libra because of the fact that their activities are continuously monitored even though all they\u2019ve been doing are completely legal. Facebook is already having a really hard time gaining the trust of their users to use Libra once it launches, especially after the Cambridge Analytica scandal that greatly affected their credibility and reputation. <\/span><\/p>\nBut if Facebook manages to develop a system that can detect money laundering without them having to monitor and scan every transaction, Libra can prevent laundering. <\/span><\/p>\nUser Security<\/b><\/span><\/p>\nFacebook promised that they\u2019re willing to shoulder the cost of losses that\u2019ll arise from scams, hacks, and loss of access to their user\u2019s Calibra wallet. Indeed, Facebook will be able to bear all these colossal losses since it is one of the largest companies in the world. But they\u2019ll still need a very big capital to cover such losses when they do happen. <\/span><\/p>\nYou also have to put into the spotlight Facebook\u2019s notorious track record when it comes to privacy. The Cambridge Analytica scandal of 2018 really showed us that Facebook is not to be fully trusted when it comes to consumer protection and privacy.\u00a0<\/span><\/p>\nFacebook has amassed billions of data from its users and it has been shown that they disregard the careful use and proper protection of this data. It\u2019s no wonder why many people are questioning the credibility of Facebook when they announced that they\u2019re developing a new type of cryptocurrency. <\/span><\/p>\nThe company has promised though that all Libra activity will be only conducted on Calibra and is separate from the data that Facebook gathers for ad targeting. They also said that third-party wallets for Libra will soon be available once it becomes live. <\/span><\/p>\nBrings Serious Implications to Global Financial Stability<\/b><\/span><\/p>\n![\"\"](\"http:\/\/www.unitedfinances.com\/blog\/wp-content\/uploads\/2019\/08\/shutterstock_1428716804.jpg\")
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Facebook has over 2.4 billion monthly users and WhatsApp has 1.5 billion monthly users. If Libra becomes live it\u2019ll instantly become global. A project this big of a scale can bring serious to global financial stability, which can lead to systemic risk.<\/span><\/p>\nWith Facebook\u2019s global network, Libra can easily takeover the world. It has the potential to replace the fiat currencies we have today thanks to Facebook\u2019s global platform. Many financial institutions like the Bank of England have raised concerns about Libra. They claim that there\u2019s not enough transparency when Libra was introduced. Some countries like India are even planning to ban Libra before it launches.<\/span><\/p>\nLibra must comply with a global regulation board but such a thing still doesn\u2019t exist. This is exactly the same problem that countries and many constitutions are worried about the cryptocurrencies that came before Libra \u2013 the lack of global regulation for cryptocurrencies. There\u2019s still no proper single institution that\u2019s designated to oversee these cryptocurrencies. <\/span><\/p>\nBut if this issue is going to be addressed, Libra has the potential to dominate the cryptocurrency world and would take over as the \u201cglobal currency\u201d. But until a single global regulation board is not yet created, Libra will have to comply with a number of regulations from around the world. <\/span><\/p>\nConclusion<\/b><\/span><\/p>\nFacebook dreams that Libra can serve a great purpose to the people around the world once it launches. But the cryptocurrency has a lot of concerns, challenges, and regulatory issues to address before it can launch. They also have to consider whether people are going to embrace Libra and adapt to a new payment system. <\/span><\/p>\nAside from that, cryptocurrencies are known to be used for various illegal activities, such as money laundering, and the same can be said about Libra. Anyone can take advantage of it for laundering because of its privacy and full anonymity, making it an ideal tool for criminals. <\/span><\/p>\nThere are still so many questions that surround Libra. Will it be backed and approved by governments from around the world? Are the people ready to embrace and adapt to Libra? Would the people even want to let Facebook manage and handle their money given their history of data breaches and accusations? Will Libra ever launch? <\/span><\/p>\nWhatever the outcome will be, the developments of this massive project by Facebook will surely be under the microscope and will be monitored by the world. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"The whole Facebook company with its founder Mark Zuckerberg in the helm is known for having boundless ambitions. Even after the company has conquered the whole social networking world, Facebook is now focusing on something bigger, and that\u2019s to revolutionize the global financial system by introducing a new type of cryptocurrency called\u00a0 \u201cLibra\u201d. Libra is … <\/p>\n
Continue reading “A Closer Look Into Facebook Libra Cryptocurrency Money Laundering Problem”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/524"}],"collection":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/comments?post=524"}],"version-history":[{"count":1,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/524\/revisions"}],"predecessor-version":[{"id":527,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/posts\/524\/revisions\/527"}],"wp:attachment":[{"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/media?parent=524"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/categories?post=524"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.unitedfinances.com\/blog\/wp-json\/wp\/v2\/tags?post=524"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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