Crypto money laundering is a growing concern for financial regulators and law enforcement. Since transactions made in cryptocurrencies are pseudonymous, criminals use the technology to hide their illicit origin. However, despite this anonymity, it is not impossible to trace cryptocurrency activity. One method criminals employ is using bitcoin mixing services. These services obfuscate an initial amount of cryptocurrency by sending smaller amounts to the receiver, which combine to form a final sum equal to the original amount minus one to three percent (taken as a profit by the coin mixing company).
These services are popular with criminals because they can help them launder ill-gotten gains from hacking, ransomware and other types of cybercrime. According to research firm Chainanalysis, crypto laundering reached USD 8.7 billion in 2021. This was an increase of 30 per cent from the previous year. Decentralized finance applications, mixers and high-risk exchanges saw the greatest increases in traffic from criminals.
The growth of cryptocurrency laundering is driven by a number of factors. The first is the rising popularity of the currency amongst criminals due to its ability to remain anonymous and untraceable. In addition, the currency is easy to buy and sell, making it ideal for criminals who want to quickly turn their stolen funds into spendable cash.
Another factor is the proliferation of 비트코인세탁 cryptocurrency exchanges that offer various services including Bitcoin mixing. These exchanges allow customers to purchase or sell their bitcoins and other cryptocurrencies without being able to verify the identity of either party. As such, these exchanges are appealing to criminals looking to avoid the regulatory scrutiny of traditional banks.
Criminals have also developed a range of methods to evade authorities when using bitcoin to launder their proceeds. One of the most common ways is by buying credits or virtual chips from online gambling and gaming sites. The criminals then use these credits to play for a short period before cashing out. This allows them to claim that the funds are from winnings in online games rather than from illegal activities.
Other techniques used by criminals to evade detection when laundering cryptocurrency include integration. Once the funds are in a form that is difficult to connect to criminal activity, they can then be legitimized by claiming they came from a profitable business venture or asset appreciation. As altcoins are volatile and can change in value by the minute, this can be challenging to disprove.
Although these methods are effective for a while, there are now tools that can help stop criminals in their tracks. For example, software that matches customer data with bitcoin transaction histories can make it easy for MSBs to identify high-risk customers and stay AML compliant. By implementing these technologies, it is possible to prevent the spread of dirty bitcoin and keep criminals from profiting from their crimes. Nyman Gibson Miralis offers expert legal advice and representation on all aspects of digital currency, encryption and money laundering laws. Contact us for assistance today.
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