How do they launder money through cryptocurrency?
The concept of "money laundering" was introduced by the famous American gangster Al Capone. A whole network of laundromats was used to launder criminal money.
But we do not live in Prohibition-era Chicago, but in the 21st century. And nowadays, unfortunately, one of the most popular "laundries" for money laundering is the crypto-industry.
Over the past two years, the FBI has found that criminals used cryptocurrencies to launder approximately $1.5 billion.
However, it should be understood that this is a very approximate amount, since the exact figure is virtually impossible to establish.
Cryptocurrency mixing services
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One of the most popular methods for money laundering is the so-called layering.
When applied to traditional finance, it looks like using "dirty" money to buy some fairly expensive asset. Most often real estate is used for this purpose.
Through a long chain of shell companies, such real estate is resold a large number of times, making it very difficult to identify the real buyer. This scheme has been successfully transferred to digital assets.
The "dirty" money is used to buy cryptocurrency. Then, using specialized mixer services - the digital equivalent of those very Al Capone laundries - the purchased cryptocurrency is divided into many pieces, which are converted into other available tokens.
Thus, a large cryptocurrency flow is divided into a huge number of "brooks" that pass through hundreds and thousands of addresses. Naturally, it is more than problematic to determine the real owner in this case.
Bitcoin mixing sites
One of the laws of macroeconomic theory states that demand creates supply. This is reflected in the emergence of many mixer services. Moreover, these sites are not hidden from anyone, access to them is not blocked, and no one impedes their work.
Such mixers allow to mix quite large amounts of cryptocurrencies. For example, the description of one of the services states: "The *service* reserves are large enough to allow the system to mix even huge amounts without any risk.
The service, of course, is not free. Size The mixer commission is approximately 1-3%. Advertising services for mixing cryptocurrencies very often can be found on the major sites on the Internet, so, apparently, with customers they have no problems.
Cryptocasino and other online games
Another popular way for criminals to launder dirty money is the online gambling industry. There is no shortage of cryptocasinos and other gaming services.
The scheme is simple. Cryptocurrency is deposited to the cryptocasino account, 1-2 modest bets are made, and then the money is withdrawn back. To speed up the process, you can not even make bets.
This method is quite popular for laundering stolen cryptocurrency, because it allows you to "cover your tracks" very quickly, especially since in such gambling services about any verification is out of the question.
Efficiency of the fight against money laundering through cryptocurrencies
Проблема отмывания денег с помощью криптовалют очень быстро достигла международных масштабов. По инициативе Японии в марте этого года разработка мер была поручена FATF (Financial Action Task Force — группе разработки финансовых мер борьбы с отмыванием денег). Конкретный план должен был быть представлен на саммите G20 в июле 2018 года.
However, FATF did not meet the deadline, and the announcement of specific methods of combating money-laundering through cryptocurrencies was postponed to the next meeting of the "Big Twenty", which will be held from November 30 to December 1.
So far, there is no effective and understandable mechanism to combat this kind of financial crime. At the moment, there are several precedents related to crypto-exchanges, but neither large fines nor criminal cases have been brought.
The problem is that those in power simply do not know how to deal with it.
The only segment where some kind of effective control is possible is the transition of fiat money -> cryptocurrencies. Only at this junction can the authorities engage some kind of regulatory restrictions.
From a technical point of view, it is almost impossible to influence money laundering through crypto. Yes, large exchanges work in the field of KYC and AML laws, but they are completely ineffective when money from mixer sites is deposited into their deposits. Note that we are talking about the large official sites. What to do in this case with decentralized cryptocurrency exchangesNobody knows at all.
In all likelihood, the old means, well proven in the fight against money laundering, in the case of cryptocurrencies will not give any result until modern methods, built on high technology, are developed.
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