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Garantex crypto exchange lost its license following suspicions of terrorist financing

Garantex crypto exchange lost its license following suspicions of terrorist financing

Estonian Money Laundering data bureau (RAB) suspects crypto exchange of systematic violations allowing money laundering and terrorist financing. 

According to Forklog, the Financial Intelligence Unit launched an audit of Garantex Europe OÜ in December 2021. The annual turnover of the exchange, exceeding €5 billion and its ties to high-risk countries, including Russia, caught the attention of law enforcers. 

According to RAB representatives, more than 90% of Garantex users failed identity verification, the so-called KYC. Some of the registered users who marked themselves as individuals turned out to be legal entities, with a turnover of between €20 and €100 million. Moreover, the platform repeatedly "forgot" to notify the RAB of suspicious transactions, including those related to crime. 

In the face of the inspection, the company revoked its license to work with digital assets, valid until February 24, 2022. The representatives of Garantex Europe OÜ argue that they voluntarily revoked their license so as to update the documents for obtaining a new license.


Know your customer (KYC)

The user identification procedure is performed by various means such as sending an SMS to a mobile number, photographing the ID card, calling a cell phone, etc. KYC is mandatory for all financial institutions. Recently, state regulators started requiring KYC procedures for users of cryptocurrency exchanges as well.

Read more: Guide to Crypto world: everything you need to know

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