<span style="font-weight: 400">Money laundering constitutes the injection of money or digital assets acquired fraudulently into circulation for use in legitimate trading activities. Traditionally, money launders target getting their money to go through banking institutions, after which it becomes part of the economy. </span>

<span style="font-weight: 400">Blockchain networks are also prone to money laundering despite the measures to prevent fraudulent crypto transactions. However, the prevalence of vice in the banking sector is higher than its level on crypto platforms.</span>

<span style="font-weight: 400">The features of blockchain technology help keep the instances of crypto fraud at a low rate, which is not achievable by the banking sector. The banking industry relies on laws that punish money laundering, while crypto security features safeguard their networks. There are points to compare and explain the prevalence of money laundering in both industries. </span>
<h2><b>More Transparency in the Crypto Industry</b></h2>
<span style="font-weight: 400">The basic structure of cryptocurrencies is the addition of a bloc of every transaction completed onto a chain accessible as a </span><a href="https://www.ledger.com/academy/how-to-read-a-blockchains-transaction-history"><span style="font-weight: 400">public ledger</span></a><span style="font-weight: 400">. Every crypto token generated history is traceable; thus easy to confirm the validity of all trades undertaken and the resulting coin transfers. The banking industry is vulnerable to money whose genesis is unknown, thus exposing the economy to higher instances of money laundering. </span>

<span style="font-weight: 400">The need for majority consensus is another element that enhances transparent trade over crypto networks. The independent nodes validate the exchange between a content holder and a buyer who possesses coins to acquire the asset. On the other hand, banking systems cannot validate users’ trade activities from which they earn the revenue, making them channels for laundered money. </span>
<h2><b>Equal Value Exchange between Trading Entities</b></h2>
<span style="font-weight: 400">The existence of </span><a href="https://www.investopedia.com/terms/s/smart-contracts.asp"><span style="font-weight: 400">smart contracts</span></a><span style="font-weight: 400"> as a means to close deals on crypto platforms offers an innovative masterpiece that alleviates fraud. The contracts are digital codes that execute a trade deal based on the terms between an asset holder and a buyer. The measure ensures equal value transfer between the two entities to close loopholes for questionable circulation of tokens. </span>

<span style="font-weight: 400">The banking system lacks a system that will strictly limit money transfers to equal value movement in the opposite direction to account for the cash circulating in the economy. Money launders use the loophole for banking money to get it from the proceeds of a legal business. The outcome is inflation risk due to more cash than the product and service supply can finish, making it lose value. </span>
<h2><b>Crypto Controls Introduction of New Coins into Circulation</b></h2>
<span style="font-weight: 400">Money printing is an avenue of money laundering where people spend cash to acquire the equipment and material for the activity. The launders then account for the new currency by disguising it as revenue from a business to get it banked. Once the money reaches the bank, it is clean and ready to circulate back to the owner for reinvesting. </span>

<span style="font-weight: 400">Crypto technology has overcome the token introduction <a href="https://www.cryptoknowmics.com/news/jack-dorseys-first-tweet-nft-goes-on-sale-for-48m-fetches-top-bid-of-just-280/">strategy</a> of money laundering using its protocols. The mining algorithm limits the process and frequency of new coin occurrences to control inflation. The need for a popular solution among the member nodes prevents the entry of tokens whose existence is untraceable. Crypto platforms are thus less fraud friendly.  </span>

<span style="font-weight: 400">The bottom line is that the crypto industry boasts less prevalence of money laundering than the banking sector. The following points explain the reason behind the observation.</span>
<h2><b>Crypto Employs Proactive Measures </b></h2>
<span style="font-weight: 400">The security measures with crypto trading are systemic instead of the external legislation that governs the banking ecosystem. Provisions such as smart contracts, proof of work, and transparent public ledger prevent trading activities that constitute </span><a href="https://www.investopedia.com/terms/m/moneylaundering.asp"><span style="font-weight: 400">money laundering.</span></a><span style="font-weight: 400"> The measures tackle the crime before it happens, but the system is helpless where successful fraud occurs because the transactions are irreversible.</span>

<span style="font-weight: 400">The reactive measures for fighting money laundering in the banking sector mark its vulnerability and high prevalence of fraud. Anti-money-laundering laws leave the system in a place where only individuals caught receive punishment instead of making the system fraud-proof. Money launders navigate through such conditions while suffering light fines, which they pay using the laundered money.  </span>
<h2><b>Crypto is Self-Governed  </b></h2>
<span style="font-weight: 400">Crypto networks provide the power of self-governance to member nodes who carry the responsibility to verify and validate transactions. The technology also determines the rate of new coin generation via mining algorithms that ensure a sustainable coin amount in circulation. These features protect crypto ecosystems against money laundering, introducing unaccounted tokens that destabilize the economic setups.</span>

<span style="font-weight: 400">Banks suffer from centralized control, which exposes the system to a higher risk of fraudulent economic activities that endanger the industry. The workload on banking staff to verify individual transactions is so much that they rely on the clients to disclose the source of their cash. The <a href="https://www.cryptoknowmics.com/news/us-secret-service-launches-crypto-awareness-hub/">requirement</a> puts fraudsters in a position to use registered businesses to disguise the money coming from selling drugs and illegal trafficking. </span>
<h2><b>Conclusion</b></h2>
<span style="font-weight: 400">The prevalent cases of money laundering in the banking sector are a problem that results from minimum internal measures. Blockchain systems are, however, better placed to deal with the issue due to existing protocols that reduce instances of fraud. The recent surge of hacking on crypto networks is a concern, but increasing user numbers promise to increase validation power and reduce money laundering.</span>

Prevalence of Money Laundering Between Banking Sector and the Crypto Industry 

Adam is an outgoing young lad who likes adventures and discovering new things.Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.

Prevalence of Money Laundering Between Banking Sector and the Crypto Industry

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