Unlocking Transparency: Harnessing Blockchain for Anti-Money Laundering in Alternative Assets. The Case of Fine Art and Real Estate

Paper presented at the Sustainable and Impact Investments International Conference (SIIIC), Rome 2023

21 Pages Posted: 20 Dec 2023

See all articles by Claudia Giannoni

Claudia Giannoni

University College London - Institute of Finance and Technology

Francesca Medda

UCL Institute of Finance and Technology

Date Written: December 12, 2023

Abstract

Environmental, Social, and Governance (ESG) criteria have emerged as critical indicators for evaluating long-term companies’ resilience and investments’ ethical implications. Anti-money laundering laws and regulations are crucial to good practices in governance, and they are becoming even more essential now that the use of blockchain and cryptocurrencies raises concerns about possible misconduct facilitated by these new technologies. Amongst alternative assets, this paper focuses specifically on real estate and fine art, which are notably vulnerable to money laundering. Firstly, the paper provides an overview of the key characteristics of these industries, which make them attractive to money launderers. Secondly, it investigates why the misuse of blockchain and cryptocurrencies can facilitate criminal activities, analysing the case of Tornado Cash, an Ethereum smart contract mixer. Finally, a different perspective on blockchain is introduced. The technology has a broader scope and applications beyond cryptocurrencies, and it can represent a valuable resource to increase transparency and promote sustainable finance objectives. Key findings are that blockchain technology can be a double-edged sword for governance and sustainable finance but has great potential to benefit society. What is crucial is an interdisciplinary approach and a comprehensive understanding of blockchain and related technologies to help policymakers and regulators shape effective policies and regulations.

Keywords: Blockchain, Smart Contracts, Zero-Knowledge, Cryptography, Money Laundering, Fine Art, Real Estate

JEL Classification: R38, C88

Suggested Citation

Giannoni, Claudia and Medda, Francesca, Unlocking Transparency: Harnessing Blockchain for Anti-Money Laundering in Alternative Assets. The Case of Fine Art and Real Estate (December 12, 2023). Paper presented at the Sustainable and Impact Investments International Conference (SIIIC), Rome 2023 , Available at SSRN: https://ssrn.com/abstract=4662355 or http://dx.doi.org/10.2139/ssrn.4662355

Claudia Giannoni (Contact Author)

University College London - Institute of Finance and Technology ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Francesca Medda

UCL Institute of Finance and Technology ( email )

London
United Kingdom

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