Cryptocurrencies can work wonders for the global economy, but financial criminals are misusing them for ML/TF, fraud, and trading illicit goods and services. Given the continuous evolution in the methods criminals use to commit financial crime using cryptocurrencies, Europol has recently published its analysis of these methods and the challenges they pose. This report is likely to help law enforcement authorities upgrade their response processes.
Criminals use cryptocurrencies to conceal money flows during ML, to pay for illicit products/services, or as an investment fraud currency. Europol points out that the share of cryptocurrency-based transactions in criminal activities is still only a small fraction of the total number (and value) of illicit transactions that take place in the criminal world. Moreover, Europol’s report informs that the number of cryptocurrency-related cases of TF is still low. Cryptocurrencies are used to commit not only cybercrime, but all types of crime based on monetary transactions. However, due to restrictions and high volatility in the sector, criminals may be reluctant to use cryptocurrencies for long-term investments. Interestingly, individuals and criminal organizations involved in serious and organized crime presently prefer to use traditional fiat money over cryptocurrencies.
An important revelation in Europol’s report is that ML networks offering large-scale ML as-a-service commonly accept cryptocurrencies for their services. Moreover, cryptocurrencies are frequently being used for monetary exchanges in illicit schemes concerning child sexual abuse material.
Fortunately, authorities are effectively regulating both the use of cryptocurrencies and the AML measures related to them. Cryptocurrency service providers are required to collect more data about their clients and the transactions they perform. These regulations help authorities better respond to illicit activities involving the use of cryptocurrencies.
Source: Europol