Cryptocurrency has in recent years become the new face of criminal transactions, from money laundering and fraudulent schemes to financing global terrorism. News of cryptocurrency being seized in raids by authorities are aplenty, while financial regulators and governments contribute to the perception of cryptocurrency and Bitcoin as the main medium of transactions in these illicit crimes. The narrative crafted around cryptocurrency is further perpetuated with some of these coins’ features, such as anonymity, full privacy and more.
“The raft of alternative cryptocurrencies that offer greater anonymity, as well as services like mixers and tumblers that help obscure the source of funds by blending potentially identifiable cryptocurrency funds with large amounts of other funds, could boost the appeal of cryptocurrency for nefarious purposes.”
According to SWIFT, short for the Society for Worldwide Interbank Financial Telecommunication, the properties of cryptocurrency makes it an ideal asset to launder money with. However, despite cryptocurrency showing growing appeal for culprits to use as a medium to avoid detection by authorities, traditional money and physical cash still remain the dominant vehicle for money laundering activities.
“Identified cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods,” the report states.
The debate on whether it is justified to brand cryptocurrency as a major driver behind the persistence or increase in money laundering activities is still ongoing, but it is a fact that the exchange of physical cash provides much more anonymity than cryptocurrency does. New tracing techniques are being continually developed from firms such as CipherTrace to provide increasing transparency to Bitcoin transactions, and even from privacy coins such as Monero and ZCash.
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