A United Kingdom-based regulatory body raised concerns that TikTok’s virtual currency could be used by unscrupulous groups in their money laundering activities.
The UK’s Financial Conduct Authority (FCA) underscored the increasing concerns surrounding TikTok Coins and served as a cautionary note on the platform. Some feared that the virtual currency could be tapped to elude traditional regulations and policies, which are crafted to curb anti-money laundering activities.
FCA is a financial regulatory office that keeps an eye on and monitors financial institutions in the UK to ensure they abide by the existing regulations that aim to stop money laundering and financing of terrorism.
TikTok Can Be A Tool For Money Laundering
The UK’s financial watchdog said that the agency received a letter from a compliance consultant previously working for a premier private bank to set alarm bells ringing on the app being utilized as an unlicensed cryptocurrency platform.
TIKTOK ACCUSED OF ILLEGALLY OPERATING AS A CRYPTO EXCHANGE IN THE UK
– A former compliance consultant accused TikTok of acting as an unregistered crypto exchange in a letter to the UK’s Financial Conduct Authority (FCA).
– TikTok’s reward system allows users to buy virtual… https://t.co/YqvGemx8jK pic.twitter.com/Yrd3OzkkxI
— BSCN (@BSCNews) October 15, 2024
According to the complaint letter, the popular social media platform permits its users to become a hub for anti-money laundering acts since its virtual currency can be exchanged for real money, saying that the platform does not have sufficient controls to ensure that its system is not being exploited for illegal activities.
The rewards program offered by TikTok facilitates the transfer of user’s funds to money service enterprises. It allowed users to purchase TikTok Coins, which they can give as presents to the content creators. After that, these gifts are traded for “diamonds,” which may be swapped for fiat currency.
As of today, the market cap of cryptocurrencies stood at $2.26 trillion. Chart: TradingView.com
The letter further highlighted the concerns raised about anonymous transactions being done in cryptocurrencies.
Cryptocurrency may become the digital tools of money launderers to hide their illicit activities, since oversight is lacking in transactions which bad actors can capitalize to conceal the origins of their dirty money.
A girl doing a Tiktok video. Image: parade.com
FCA Urged To Step In
The compliance consultant claimed that in practical terms, the company is exchanging cryptocurrency assets for cash without registering with the FCA.
It becomes clear that there are issues with the platform’s current structure, particularly about its capability of transferring money which is exempted from legal restrictions imposed on financial transactions.
Once FCA steps in, the platform’s financial operations could be audited, particularly its virtual currency system, and be subjected to laws governing digital currencies and money transmission services.
TikTok’s Long Lists Of Allegations
TikTok has once again been put under scrutiny for allegedly functioning as an unlicensed cryptocurrency exchange in the UK without securing any license from the FCA.
Likewise, Australian authorities are closely examining TikTok for allegations that money involved in criminal activities are being channeled in the platform.
In the United States, authorities banned the use of TikTok to protect the privacy of Americans.
Featured image from Stern, chart from TradingView