The Most Important Impact On Money Laundering Ever!

Cryptocurrency and money laundering!  The changing face of money laundering is here!  I firmly believe that the advent of cryptocurrency is one of the most forceful impacts on money laundering EVER! I don’t make such a bold statement without history and experience to back up this statement. I think it is such a forceful impact, that I am making it the subject of my first posts here on my personal profile website. You may ask just what gives me the audacity to make such a statement? Great question! In this day and age of Twitter and millions of blogsites, just about anyone can make any dramatic statement they want. Right?

Well I don’t make such a statement in a vacuum. I firmly believe that cryptocurrency and money laundering may as well be combined into one word. Sort of like Brangelina! I will leave it up to TMZ to come up with a catchy name. But the reality is, cryptocurrency and money laundering are both real and both here to stay. They will only get bigger!

Why Are You Scaring Us?

I really not trying to scare anyone or cause wide-spread panic. I spent 25 years as a special agent with the FBI, so I have very many real-world experiences. Most of the investigations I was involved with, dealt with financial crimes and money laundering activity. These investigations were quite complex financial investigations. Unfortunately the criminals are always trying to stay ahead and law enforcement. So the complexity of the hiding and movement of funds continues to grow. With the introduction of cryptocurrency, the complexity will only continue and grow and at a rapid pace.

Is Money Laundering Really That Big Of A Problem?

Sure, all of us hear the term “money laundering” all the time. It’s tossed around so much, it seems like everybody seems to either be an expert on it, or acts like they are. Hell even Aunt Becky from Full House and her husband were recently charged with money laundering. Whether someone knows the true definition of what money laundering is, is irrelevant. As long as the prosecutor who is bringing charges knows what the true definition of money laundering is and how to legally charge it, the layperson doesn’t really need to know exactly what it is. What we all need to know, is that it is real and that it is happening in a big-way.

If you’re ever having trouble getting to sleep and looking for a little light reading, take a look at The National Money Laundering Threat Assessment Report issued by the U.S. Treasury Department. During my time in Washington DC, I assisted in compiling data for this report. So I am quite familiar with it and the information it contains. I won’t try and trick you and say that it reads like a Jerry Seinfeld novel. It does not! But it does contain some very alarming data relative to money laundering.

According to this report:

The United States continues to estimate that domestic financial crime, excluding tax evasion, generates approximately $300 billion of proceeds for potential laundering, based on the sources and analysis cited in the 2015 NMLRA.2 Criminal prosecutions and law enforcement investigations indicate that most of the money earned from crime in the United States stays in the United States, but also that the United States is an attractive destination for illicit funds generated abroad.

The crimes that generate the bulk of illicit proceeds in the United States are fraud, drug trafficking, human smuggling, human trafficking, organized crime, and corruption. The many varieties of fraud, including bank fraud, consumer fraud, healthcare fraud, securities fraud, and tax refund fraud, are believed to generate the largest share of illicit proceeds.

The report goes on to state that:

Virtual currencies, in addition to being the preferred form of payment for buying illicit drugs and other illicit goods online and paying the perpetrators of ransomware attacks, are also now used as a money laundering vehicle. Global money laundering syndicates have added the option of moving illicit proceeds into and through virtual currencies as another way to layer transactions in order to hide the origin of dirty money.

Anonymity in transactions and funds transfers is the main risk that facilitates money laundering. Criminal actors involved in drug trafficking, human smuggling and trafficking, illicit retail transactions, and various activities associate with organized crime continue to prefer U.S. currency-denominated cash due to its widespread use in the U.S. as well as its global use due its wide acceptance as a stable store of value and medium of exchange. Virtual currencies, when exchanger and administrators are unregulated, also provide anonymity and pose risks due to the speed they can be transmitted, disintermediation, global reach, and the lack of regulation and supervision in many jurisdictions. The risk of the misuse of cash and virtual currency is mitigated in the United States by the imposition of AML program, suspicious and currency transaction reporting, and customer recordkeeping requirements on financial institutions.

So it’s plain to see from the threat assessment report compiled by the U.S. Treasury Department, money laundering is a HUGE problem. But it is now confounded by the introduction and use of cryptocurrency.  Just take a look at the amount of online news devoted to cryptocurrency and you can see it is not just a fad.

Crypto-What?

Like many of us, when I first heard the word “cryptocurrency,” I thought it was something out of Raider’s Of The Lost Ark movie. What the heck is cryptocurrency? My first inclination was that it was some techno-fad that would go the way of beta-max. I fully expected to see it decline into a slow-death march into a heap of other great techno-ideas. Sitting right on-top of the heap with a pile of used Blackberry phones. Boy was I wrong? Well as we all know, Cryptocurrency is still around and only getting bigger! While it hasn’t been enjoyed wide-spread embrace yet, it is only a matter of time before it’s in the hands of as many people who are staring into iPhones at this very moment. It is just too good of a technology to ignore. Unfortunately, for both legitimate and illegitimate uses.

Conclusion

Cryptocurrency is here to stay…bet on it Dano! It appears to have an array of legitimate uses in the real-word. But it also appears to have much potential in the seedy underworld of crime. Its use as a go-to tool for money laundering is almost a given. It has many traits that make it an attractive option for money laundering. While I don’t want to give a litany of reasons here for the reasons it is attractive, that may only serve to motivate or influence those on the fringes of using it for laundering purposes. But many of the elements that make it attractive for legitimate purposes, can be attributed to its uses as a facilitation tool for money laundering. The big question will be, what are going to do to prevent it?