Money laundering basically amounts to bad people moving bad money through what look like good transactions. Trying to separate the good from the bad is difficult when so many deals are opaque or hidden on papers that get pushed between parties. Put that information through a blockchain, and you get a clearer view of what happens between buyer and seller. Obscure identities can be revealed, the origin and destination of funds made clear, and complex activities recorded for future reference.
Of course, this assumes that we can create the right kind of digital identities and records in the first place. This puts a big burden on the due diligence done by on-boarding parties and the quality of their digital wallets – where parties store their assets. We already have reams of existing records documenting licensing, the exchange of titles, and so on. Once digitised, advances in artificial intelligence will enable us to verify the digital representation of an identity, asset or service automatically. These identities, however obscure, will then remain as information for future reference.
We cannot clean up a market if the information isn't trusted as immutable. Once it is, we can work to identify and address the issues. This will help counteract the continued use of offshore-registered corporations, tax havens and domiciles that don't ask any questions.
Yet there are transparency questions to ask ourselves. Do we want every detail to be recorded, such as our bank balance when we apply for a mortgage? What happens to concepts like the "right to forget"? These are difficult questions to answer. But it is likely that the future benefits – a trusted marketplace, a smoother exchange of goods and services and a clear inventory of identity – will outweigh the concerns.
Looking further ahead, blockchain also promises innovation in the structure of real estate itself via tokenisation, whereby assets are converted into smaller digital chunks to be distributed among different buyers and sellers frequently and instantly. It will surely also give rise to new real estate investment vehicles and services that we can't currently imagine today.
This is an extract from Modus, Asia Pacific, Q1 2019