Is Crypto a Tool That Helps Money Launderers?


For as long as dirty money exists, so will money laundering. The United Nations Office on Drugs and Crime (UNODC) estimates that roughly $800 billion to $2 trillion of the world’s GDP is washed every year due to money laundering. Criminals have exchanged money for precious metals (like gold and platinum), misstated invoices, rinsed cash or simply just strap money to their bodies and fly to places where banks don’t ask questions. Now criminals have a new modus: cryptocurrencies.

While data suggests that crypto-laundering is still not as rampant as other forms of money laundering, the fact that it happens is enough to raise a concern to governments everywhere. What makes cryptocurrencies appealing to criminals is its global availability, speed and irreversibility of transactions and anonymity.

According to Rob Wainwright, head of Europol, an estimated 3-4% of Europe’s annual criminal takings, or £3 billion – £4 billion ($4.2 billion-5.5 billion) are crypto-laundered. Wainwright believes the numbers will grow and the problem will get worse. America’s Drug Enforcement Administration, on the other hand, believes more international crime syndicates will be using cryptocurrencies.

Dirty cash—from drugs—can be “washed” by converting it into crypto, dividing it into smaller amounts and moving it into the crypto-space, via different virtual currencies. In the same way, dirty crypto can be moved around (often at high-speed and in micro transactions) until it becomes clean enough to be switched into ordinary money.

Fortunately authorities are catching up to this modus. Last month a man was jailed in the Netherlands for taking €11million ($13.2 million) in dirty bitcoin, converted them to ordinary money, withdrawing the cash and returning to the criminals, minus his commission.

Professional launderers are now using more complicated methods, often using a combination of old and new ways to avoid detection, according to experts.

Michael McGuire of the University of Surrey says that, “Sticking £10,000 down your underpants and flying to Zurich is still quite a common and easy way to lauder money”. However, he added that governments must work harder to get cash off the street and crack down on the different methods criminals use to launder money.


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