Some authorities in the United States have expressed concern that drug cartels and other international criminal enterprises are increasingly turning to cryptocurrency to aid with money laundering.
Janice Ayala of the U.S. Department of Homeland Security Investigation’s Joint Task Force mentioned at a recent hearing claimed that Chinese transnational criminal entities have been responsible for a “recent significant increase in money laundering using cryptocurrency.”
Authorities in the United States believe criminal enterprises have been shifting towards using Chinese and Asian money launders due to the large amount of trade goods imported from China, which streamlines the process of laundering money.
Illicit Cryptocurrency Use Is Still Very Low
Reporting from the Asia Times noted that cryptocurrency usage is still a very small part of the estimated $2 trillion-dollar turnover when it comes to money laundering.
The U.S. Drug Enforcement Agency (DEA) has been writing on how crypto’s vulnerability to money laundering continues to emerge. It explained in the 2017 National Drug Threat Assessment Report that “Bitcoin and other virtual currencies [which] enable TCOs [transnational criminal organizations] to easily transfer illicit proceeds internationally”.
The agency noted TCO’s were turning to bitcoin due to “its longevity and growing acceptance at legitimate businesses and institutions worldwide.” However, Yaya Fanusie of the Foundation for Defence of Democracies told Asia Times the “evidence of organized crime using crypto has been sparse.” He noted crypto is not replacing ‘old’ methods of money laundering, like cash.
Fanusie indicated he had not seen much evidence of Mexican drug cartels actually utilizing cryptocurrencies yet. According to him, the report by the DEA just touched on general trends. Some other countries have taken steps to curtail purported money laundering risks related to cryptocurrency.
In early December, news outlets in Estonia reported on how the Ministry of Finance was set to add amendments to a piece of financial legislation after noting crypto-related companies offering services posed a money laundering risk.
Time For Law Enforcement To Get Smart About Crypto
Fanuise said criminals looking to utilize cryptocurrency could open up multiple accounts and use a variety of digital wallets in order to move money around in small amounts, which usually does not attract attention from authorities.
He advocated that law enforcement agencies need to better emphasize cryptocurrency analysis training. Departments dealing with cyber-related issues should also “deepen their expertise” on blockchain technology to keep up potential criminal schemes.