[By Kamran Gasimov, Bank analyst] In many countries, banks are controlled by the government. If a certain user of the bank has problems with the government, it’s almost certain that their bank accounts will be frozen. But this shouldn’t happen. In healthy democracies, each power must remain independent. This means that political and economic power must have different administrations.

Corrupt governments often take over banks to carry out illicit commercial activities without receiving sanctions. For example, some politicians and other influential people use banks to launder money obtained through bribes, organized crime, and drug trafficking. Unfortunately, in many cases, banks have become instruments of crime.

Blockchain technologies could greatly reduce the vices derived from political influence in the banking sector. Many banks refuse to implement this type of technology because the personal information of the parties involved in a transaction remains anonymous. In case of some criminal activity, such as the financing of terrorism, it would be very difficult to determine the identity of the perpetrators behind.

However, if administration of wallets remains under the control of regulatory institutions, it’s possible to get personal information from users allegedly involved in criminal activity. Ironically, many banks fear not knowing the banking information of potential terrorists, when many of these institutions protect the identity of the most dangerous criminals.

Several years ago, the famous bank HSBC occupied the front pages of international media, after an investigation showed that corrupt politicians, drug traffickers, and terrorists kept their money in the bank, but protected their identities by assigning fake account owners.

In fact, corruption has affected even the most powerful financial institutions in the world. However, the implementation of blockchain technologies would stop the financing of crime in the world. How?

In a blockchain, money doesn’t come from a single issuer, but from several. For a transaction to be possible, the interests of issuers and recipients must be the same. If it’s presumed that one of the issuers is involved in illicit activities, the transaction may be terminated. Through security protocols, the information of a transaction can be audited automatically.

Through blockchains, errors associated with human audit disappear. Many auditors can be bribed to go through some warning signs during an important transaction. That explains how so many millions of dollars from international crime ended up in the HSBC vaults. The representatives of the banks accepted bribes so as not to alert the authorities about the origin of the money.

Perhaps, some were threatened. Crime always finds a way to achieve its objectives. However, in a blockchain, everything is done by a computer. Not even the richest criminal could bribe a computer.

Although the implementation of the purchase, sale, and exchange of cryptocurrencies involves several risks, the advantages are even greater. Terrorist organizations won’t be able to use banks as financing platforms, international transactions will be effective in a matter of minutes, corruption and risk of fraud will decrease.

Once the world learns how to handle cryptocurrencies and blockchain technologies, our current concept of the international banking system will change forever.

Kamran Gasimov is an Adviser to the Chairman of the Board and Director of Creation of Bank Products and Development of Sales Channels at MuganBank OJSC. He also is a Co-Founder and Development Director of Accounting and Tax Resources and the Founder and Director of Richmond Group.