A United Kingdom-based regulatory body raised concerns that TikTok’s virtual currency might be utilized by unscrupulous groups of 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 might be tapped to elude traditional regulations and policies, that are crafted to curb anti-money laundering activities.
FCA is a financial regulatory office that keeps a watch on and monitors financial institutions within the UK to make sure they abide by the present 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 purchase virtual… https://t.co/YqvGemx8jK pic.twitter.com/Yrd3OzkkxI
— BSCN (@BSCNews) October 15, 2024
In response to the grievance letter, the favored social media platform permits its users to grow to be a hub for anti-money laundering acts since its virtual currency might be exchanged for real money, saying that the platform doesn’t have sufficient controls to be sure that its system shouldn’t be 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 buy TikTok Coins, which they can provide as presents to the content creators. After that, these gifts are traded for “diamonds,” which could also 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 grow to be the digital tools of cash launderers to cover their illicit activities, since oversight is lacking in transactions which bad actors can capitalize to hide the origins of their dirty money.
A lady doing a Tiktok video. Image: parade.com
FCA Urged To Step In
The compliance consultant claimed that in practical terms, the corporate is exchanging cryptocurrency assets for money 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 might 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 more been put under scrutiny for allegedly functioning as an unlicensed cryptocurrency exchange within the UK without securing any license from the FCA.
Likewise, Australian authorities are closely examining TikTok for allegations that cash involved in criminal activities are being channeled within the platform.
In america, authorities banned the usage of TikTok to guard the privacy of Americans.
Featured image from Stern, chart from TradingView