Need to integrate blockchain tools to trace crypto asset transactions

Speaking at the workshop “Sharing experiences in managing and operating centralized crypto-asset exchanges”, on the morning of March 27, Lieutenant Colonel Duong Duc Hung - Deputy Head of the Counter-Terrorism Department, Department of Internal Security (Ministry of Public Security) said that the outstanding feature of centralized crypto-asset exchanges (digital assets created, issued, stored, transferred and authenticated by digital technology) is anonymity. At the same time, this transaction has a fast speed and the ability to connect across borders without going through traditional financial intermediaries.

These advantages, while convenient for legitimate users, inadvertently create an ideal environment for criminal and terrorist organizations to exploit.

“Globally, according to Chainalysis’ 2022 report, the total value of cryptocurrencies involved in money laundering has reached a record $31.5 billion. In particular, anonymous cryptocurrencies such as Monero, Zcash or Dash with advanced encryption technology make it even more difficult to trace the source of money. Anonymous cryptocurrencies have become the preferred tool of terrorist organizations in raising capital and transferring money illegally,” said Mr. Hung.

Delegates attending the workshop “Sharing experiences in managing and operating centralized crypto-asset exchanges”.

According to Mr. Hung, although there have been no specific cases of large-scale terrorist financing through cryptocurrencies in Vietnam, the risk is completely real and increasing. Vietnam has become a potential target for terrorist financing activities through crypto assets because it is located in the center of Southeast Asia, near countries that have been affected by terrorist activities such as Indonesia, the Philippines and Thailand.

This puts Vietnam at risk of becoming a transit point for illegal cross-border money flows, including terrorist financing. The popularity of cryptocurrency transactions without formal financial intermediaries, combined with the fact that cash still accounts for a large proportion of the Vietnamese economy, has created loopholes for bad actors to hide illegal sources of money.

A recent report by the State Bank of Vietnam shows that only about 30% of financial transactions in Vietnam are conducted through the formal banking system. The rest are mainly cash or uncontrolled channels - a favorable condition for terrorist financing activities.

Currently, Vietnam does not have a complete and clear legal framework to manage crypto assets and exchanges. This not only makes it difficult for law enforcement agencies to monitor, but also allows unlicensed exchanges to operate widely, potentially at risk of being exploited for illegal purposes.

“This risk becomes even more serious when Vietnam is on the "Gray List" of the Financial Action Task Force (FATF) from 2023. According to the International Monetary Fund (IMF), countries on this list may suffer an average loss of 7.8% of GDP due to loss of confidence from the international community.

“Failure to control terrorist financing activities through cryptocurrencies could put us in a higher risk group, seriously affecting the national reputation and economy,” Mr. Hung emphasized.

Proposing solutions for the management and operation of crypto-asset exchanges in Vietnam, Mr. Hung said that Vietnam needs to build a clear and comprehensive legal framework. The Government, in coordination with the State Bank, the Ministry of Finance, the Ministry of Public Security and relevant agencies, needs to urgently issue a complete legal framework.

It is necessary to establish an interdisciplinary working group, including representatives from the Ministry of Public Security, the State Bank of Vietnam, the Ministry of Finance and the Vietnam Blockchain Association to monitor and share information on suspicious transactions. Apply advanced monitoring technology.

“Centralized crypto-asset exchanges in Vietnam need to integrate blockchain analytics tools such as Chainalysis, Chain Tracer or Elliptic to track and trace transactions in real time. These tools have been used by international security agencies to detect transactions related to Hamas, ISIS or Hezbollah, and can support the Vietnamese police force in their investigations,” Mr. Hung recommended.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/tai-chinh-ngan-hang/can-tich-hop-cac-cong-cu-blockchain-de-truy-vet-giao-dich-tai-san-ma-hoa/20250327102730270