El Salvador's law-making bitcoin legal tender means banks face higher risks, including of violating rules against money laundering and terrorism financing, rating agency Fitch said in a report on Friday, Reuters reported.
The bitcoin move, set to take effect on Sept. 7, "would increase financial institutions' regulatory, financial and operational risks, including the potential of violating international anti-money laundering and terrorist financing standards," said Fitch. The possibility of using bitcoin for all obligations, including bank loans, could funnel bitcoin traffic through the Central American country, which "may increase the risks that proceeds from illicit activities pass through the Salvadoran financial system," Fitch said.