Facebook’s relationship with financial institutions could be threatened if it launches its cryptocurrency Libra without fully addressing concerns over money laundering, The Financial Times (FT) reported on Tuesday (Oct. 22).
ING chief executive officer (CEO) Ralph Hamers told FT that banks are the “gatekeeper to the financial system” and they can’t bankroll companies that are suspected of “opening up [the system] for financial . . . crime.”
“Then we can take measures and exit the client, or not accept the client, so those are discussions you would have to have,” Hamers told the news outlet. He further confirmed that Libra could jeopardize Facebook’s future funding.
“From the beginning, we’ve said we’re committed to taking the time to get this right … As a member of the Libra Association, we will continue to be a part of this dialogue to ensure that this global financial infrastructure is governed in a way that is reflective of the people it serves. Facebook will not offer Libra through its Calibra wallet until the Association has fully addressed regulators’ concerns and received appropriate approvals,” a Facebook spokesperson told FT.
Regulators are concerned that the Switzerland-based Libra could be used for money laundering — and until those fears are addressed, banks will avoid the project.
Mark Zuckerberg, Facebook’s CEO and founder, is expected to address money laundering and other Libra concerns when he testifies before the Financial Services Committee on Wednesday (Oct. 23).
Earlier this month, the Bank of England’s (BoE) Financial Policy Committee (FPC) handed down a set of strict rules that Facebook’s Libra and other cryptocurrencies must follow in order to do business in Britain.
The “rules of engagement,” as the BoE calls them, show that financial institutions are taking digital currencies like Libra seriously. The FPC will exercise current authoritative “tools” instead of adopting new rules.
Crypto wallets will be considered bank accounts and will be subjected to rules like deposit insurance and cash flow.