By Habibat Aliu
Head, of Risk and Compliance, eTranzact International Plc, Edward Onyenweaku, has recommended blockchain technology as a necessary tool for improving transparency and reducing money laundering in the financial system space.
Onyenweaku made the call during a panel session tagged, ‘the Growing Threat of Money Laundering in the Financial Sector – Know Your Customer (KYC) and Anti-Money Laundering (AML) as a Disabler’ at the 2023 series of AfricaNXT conference in Lagos.
Onyenweaku said blockchain adoption would increase the level of trust, security, transparency, traceability, and security of shared data.
He added that blockchain automates the process of fraud detection with the help of built-in algorithms.
According to him, transactions are continuously monitored as alerts of any suspicious activities are created.
“This enables financial institutions to stop such transactions, which might lead to money laundering in real time. Blockchain plays a good role here because of its real-time algorithm.
“Blockchain maintains a complete history of past transactions within the network, which means that the user can track the data with full transparency.
“It also supports compliance automation by providing clean, accessible, real-time data, instead of asking people and third parties information on reviewers and auditors can verify transactions on blockchain records instantly, without contacting intermediaries,” he stated.
Onyenweaku decried the impact of money laundering in the financial sector, saying it erodes profits due to sanctions by the regulators while increasing low confidence in the market.
He listed other consequences, including loss of financial institutional reputation, credibility, revenue, and investors’ confidence.
