The increasing popularity of virtual assets is also increasing the risk of its misuse for money laundering activities. Elaborate. Also, suggest measures to mitigate the risk.

Virtual assets are those, which are created and stored using Blockchain technology, e.g. cryptocurrency like Bitcoin. They have been criticised for their ability to aid money laundering in following ways:

• Virtual assets offer their users anonymity. It is easy to carry out financial transactions to disguise the identity of owner and source of funds.
• Law enforcement agencies have struggled to curb this type of money laundering.
• While virtual assets are largely not authorized in most nations. Criminals still flout the rules and secure access to them.
• There is no global regulatory regime governing use of these virtual assets.

Corrective actions that can be taken:

• Virtual assets should not be made legal tender, else they will be misused.
• A Central Bank Digital Currency (CBDC) can be explored to address mass hysteria surrounding Bitcoin. This digital currency will be used instead of other virtual assets.
• CBDC will be traceable by Reserve Bank of India. Then scope for money laundering will fall.
• India, along with other like-minded nations should push for robust regulation of these virtual assets.
• Financial information exchange agreements should be made more comprehensive to deter misuse of these assets for money laundering.

Money laundering indicates prevalence of crime, weakens rule of law and deprives government of revenue. It must be urgently addressed through adequate regulation of virtual assets.