Bitrabo Editorial
A regulatory organization in the United Kingdom has expressed worries that TikTok’s virtual currency might be exploited by dubious entities for money laundering.
The UK’s Financial Conduct Authority (FCA) highlighted the growing apprehension surrounding TikTok Coins, warning that these virtual tokens could enable avoidance of standard regulations designed to combat money laundering.
The FCA is a regulatory agency responsible for supervising financial institutions in the UK, ensuring adherence to regulations aimed at preventing money laundering and financing terrorism.
Potential for Money Laundering via TikTok
The UK financial regulator noted it received a letter from a former compliance consultant at a leading private bank, raising concerns about the app being used as an unauthorized 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… pic.twitter.com/Yrd3OzkkxI
— BSCN (@BSCNews) October 15, 2024
The complaint indicated that TikTok could act as a facilitator for money laundering, allowing its users to exchange virtual currency for cash without adequate safeguards against misuse for illegal activities.
TikTok’s rewards program enables users to transfer funds to money service businesses. Users can buy TikTok Coins which they can gift to creators, who in turn can exchange these gifts for “diamonds,” convertible into real money.
The letter further indicated worries about the potential for anonymous cryptocurrency transactions.
Cryptocurrencies could serve as tools for money launderers seeking to obscure the origins of illegally obtained funds, particularly due to the lack of oversight in such transactions.
Call for FCA Intervention
The consultant pointed out that TikTok is effectively exchanging cryptocurrency for cash without any registration with the FCA.
This raises critical questions regarding the platform’s ability to handle financial transactions without compliance with legal frameworks.
The FCA’s involvement could lead to a thorough audit of TikTok’s financial practices, particularly its virtual currency functions and compliance with laws related to digital currencies and money transmission.
TikTok’s Series of Allegations
TikTok faces renewed scrutiny for allegedly operating as an unlicensed cryptocurrency exchange in the UK, lacking the necessary FCA license.
Additionally, Australian authorities are investigating claims that the platform is being used to funnel money from criminal activities.
In the United States, regulatory action has led to the banning of TikTok to safeguard American privacy.
Featured image from Stern, chart from TradingView