Pandora Papers: Is blockchain technology the solution to financial fraud?
As revelations from the Pandora Papers continue to explode, a financial expert says things of this nature will occur until blockchain technology is more widely implemented.
Faisal Sheikh, Lecturer in Accounting and Finance at the University of Salford Business School does research specialising in accounting fraud and Blockchain Technology.
He said: “Pandora Papers is a leak of approximately 12 million documents that lifts the lid on hidden wealth, tax avoidance and, in some instances, money laundering by some of the world's uber rich and powerful.
“This situation will continue until Blockchain Technology (BCT) becomes an accepted financial measure, just like double-entry bookkeeping. BCT is a system of recording information in a manner that makes it very difficult if not impossible to alter, hack or defraud the system.
“A blockchain is basically a digital ledger of transactions that is replicated and shared across the whole of the network of IT systems on the blockchain. Each block in the chain comprises transactions, and each time a fresh transaction takes place on the blockchain, a record of that transaction is simply added to every stakeholder’s or participants ledger or record.
“The beauty of BCT is that is it creates a transparent, decentralised and therefore, a trust-less system which is visible to every participant in the blockchain.
“It uses a decentralized network, where each participant or node is required to authenticate alterations, making it highly secure and reliable. Thus, allowing global regulators to peruse records and act with a high level of assurance. It comprises of an immutable ledger that records confirmed identities of those behind every single electronic transaction which can act as a huge deterrent to money laundering. As it would provide conclusive proof in a court of law of a person or company ‘s participation or wrongdoing.
“Detecting money laundering through BCT would be predicated on smart contracts that are programs warehoused on a blockchain that run when pre-set conditions are met. They are “usually used to automate the execution of an agreement/contract so that all participants can be immediately certain of the outcome, without any intermediary’s interference for example money transfer. Hence, a BCT AML platform that used smart contracts would be able to utilise integrated algorithms to automate the process of AML fraud detection.
“By programming inbuilt requirements, such as the need for authenticated ID, this technology would be able to immediately block or red flag any suspicious transactions.
“It is high time that global governments treated the annual money laundering problem, worth an estimated $2 Trillion, on par with climate change and force organisations to adopt BCTs. Otherwise there will be continued leaks which will become a toxic flood and there will a vicious fight to get a seat on ‘Noah’s Financial Ark’.”
For all press office enquiries please email email@example.com.