Crypto & NFTs Dominated Money Laundering Discussions in 2021

2021 is coming to a close, and while the vast majority of us are out shopping for last-minute gifts or planning family dinners and wrapping presents, criminals are working. Organized retail smash and grabs will continue to steal headlines through the holidays, ransomware gangs will continue to demand money from innocent corporations and black market sellers will continue to sell illicit stuff on the black market. They don’t get holiday time off. All of them, at some point, will need to take a moment to launder the proceeds of their crimes, and that’s where 2021’s most popular money laundering topic* — Cryptocurrency — comes into play.

Cryptocurrency’s influence on the money laundering arena today is so widespread that it has literally become like an umbrella. Without the existence of crypto this year’s 2nd most popular money laundering related topic, NFTs (non fungible tokens), wouldn’t even appear on the list. Why? Because decentralized cryptocurrencies like Bitcoin and Ethereum power the NFT game. The cryptocurrency umbrella, or ecosystem, offers crooks around the world who are looking to clean large amounts of cash (minus those in China and India) with the most efficient money laundering platform available in the world today, and quite possibly in history.

Crypto’s decentralized nature — no government oversight, regulation or taxation — means that any Illicit funds that have been turned into Bitcoins and then mixed professionally are very difficult to trace. Nor has there been any proactive effort from the crypto industry, the coin companies and crypto exchanges, to implement anti-money laundering (AML) policies, procedures or AML technology solutions. The crypto industry knows it has a KYC (know your customer) problem and to be frank, that is part of its ultimate appeal. It is like the wild west, only in digital mode.

How simple is the crypto recipe for money launderers?

-Simply invest your illicit funds in Bitcoin, and then coordinate the transfer and mixing of these funds with other individuals or groups to cover the trail further before cashing out with your legitimate share of the funds.

-If you don’t have a network of like-minded folks to mix with, don’t fret. There are a number of different coin mixers available for people in your situation, such as, ChipMixer or Anonymix, all of which promise user anonymity.

-After mixing, your cash is virtually clean, all you have to do is spend it. You can conveniently withdraw your mixed cash from any Bitcoin ATM. Keep in mind, going solo is dangerous if you start mixing and spending huge sums.

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Richard Paxton

CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.

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