Fighting money laundering is like playing a vast game of whack-a-mole. One of the developments that keeps officials up at night is the rise of crypto-currencies. Just think of it: untrackable funds — what could be more perfectly suited to scrubbing your riches shiny clean? When it comes down to it, money laundering is all about disguising the sources of wealth.
Here's an example: Gangs in Europe bought cocaine from Colombian cartels having shifted Euros into crypto-currencies and depositing the funds in a digital account that had a Colombian registration. From that account, the crypto-funds were turned into pesos using an internet exchange and taken out in the form of cash. The cash was distributed to multiple "money mules" who deposited the small sums into local bank accounts. The cartels then collect their squeaky-clean sums via e-transfer or cash withdrawals.
Similarly, the nefarious nerds behind ransomware attacks can brush the mud from their dirty crypto through lightning-fast digital swaps and by "micro-laundering," a practice that involves atomizing the money into quantities so small that by the time its reassembled, the electronic path it took is too dizzyingly complex to follow.
Crypto-cleaning is still in its infancy and is reckoned to account for just a fraction of all money laundering. Still, the authorities are keeping a close eye on developments. It seems like it's just a matter of time before digital-dodging goes mainstream [source: The Economist]. And while digital money is state-of-the-art, that doesn't mean that it can't ultimately be tracked. After all, crypto-currencies, like Bitcoin, are really just forms of data. And if law enforcement officials are diligent and clever enough, they can follow that data back to its source.
Meanwhile, crypto enthusiasts, aware that their digital darling is being linked by association with crime, are demanding that governments get hip to the new tricks and do some legislating. Without effective regulation to deter virtual money laundering, they argue, crypto currencies will languish in the shadows instead of becoming what they could be: the future of money [source: Beer].
For more information on money laundering and related topics, check out the links below.
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More Great Links
- "The Black Market Peso Exchange." PBS.org. http://www.pbs.org/now/politics/peso.html
- Beer, Kieran. "From the Editor: Regulatory Oversight Can Save Cryptocurrency from the 'Dark Side.' ACAMS Money Laundering.com. March 9, 2018. (Sept. 7, 2018) https://www.moneylaundering.com/news/from-the-editor-regulatory-oversight-can-save-cryptocurrency-from-the-dark-side/
- Bowley, Graham and William K. Rashbaum. "Has the Art Market Become an Unwitting Partner in Crime?" The New York Times. Feb. 19, 2017. (Aug. 14, 2018) https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html
- Dayen, David. "Paul Manafort's Alleged Money-Laundering Scheme Was Exposed Months Ago." The Intercept. Oct. 30, 2017. (Sept. 4, 2018) https://theintercept.com/2017/10/30/paul-manafort-money-laundering-scheme-was-identified-months-ago/
- "DeLay faces money laundering charge." CNN.com. October 3, 2005. http://www.cnn.com/2005/POLITICS/10/03/delay.indictment/index.html
- FDIC. "Bank Secrecy Act and Anti-Money Laundering." (Aug. 14, 2018) https://www.fdic.gov/regulations/examinations/bsa/index.html
- FCEN (Financial Crimes Enforcement Network). "History of Anti-Money Laundering Laws." (Sept. 7, 2018) https://www.fincen.gov/history-anti-money-laundering-laws
- Giroud, Sandrine and Deborah Lechtman. "Art, money laundering and terrorist financing: new developments in Swiss law." International Bar Association. Sept. 29, 2015. (Aug. 13, 2018) https://www.ibanet.org/Article/Detail.aspx?ArticleUid=1955a8f5-bdaa-447d-9b57-a95309cf350a
- Helmore, Edward. "Art market in 'mania phase' and risks bursting of the bubble, report says." Jan. 17, 2016. (Aug. 14, 2018) https://www.theguardian.com/artanddesign/2016/jan/17/art-market-mania-phase-bubble-report
- IRS. "Criminal Investigation 2017 Annual Report." Aug. 14, 2018. https://www.irs.gov/pub/foia/ig/ci/2017_criminal_investigation_annual_report.pdf
- Molander, Roger C., David A. Mussington, and Peter A. Wilson. Cyberpayments and Money Laundering: Problems and Promise. Santa Monica. Rand, 1998. https://www.rand.org/pubs/monograph_reports/MR965.html
- Morris-Cotterill, Nigel. "Money Laundering." Foreign Policy, May/June 2001. https://www.globalpolicy.org/component/content/article/172/30048.html
- Narcotic News. "Cocaine Prices." 2018. (Sept. 7, 2018) http://www.narcoticnews.com/drug-prices/cocaine/
- The Economist. "Crypto money-laundering." April 6, 2018. (Sept. 4, 2018) https://www.economist.com/finance-and-economics/2018/04/26/crypto-money-laundering
- The Economist. "Culture and jihad, grimly connected through the art market's "blood antiquities." Nov. 30, 2015. (Aug. 13, 2018) https://www.economist.com/blogs/prospero/2015/11/antiquities-and-terror
- Treanor, Mary K. "The Fifth Anit-Money Laundering Directive." Money Laundering Watch Blog. May 8, 2018. (Sept. 7, 2018) https://www.moneylaunderingwatchblog.com/2018/05/the-fifth-anti-money-laundering-directive-extending-the-scope-of-the-european-unions-regulatory-authority-to-virtual-currency-transactions/
- UN General Assembly. "Money Laundering." UN General Assembly Special Session on the World Drug Problem. June 10, 1998. (Aug. 14, 2018) https://www.un.org/ga/20special/featur/launder.htm
- U.S. Dept. of Treasury. "Appendix D – Fundamentals of the Funds Transfer Process." (Aug. 14, 2018) https://www.fincen.gov/sites/default/files/shared/Appendix_D.pdf
- "United States Breaks Up Colombian Drug Money-Laundering Ring." U.S. Department of State. https://www.globalsecurity.org/security/library/news/2005/06/sec-050617-usia01.htm
- Watson, Andrea. "Islamic State and the 'blood antique' trade." BBC. April 2, 2015. (Aug. 14, 2018) http://www.bbc.com/culture/story/20150402-is-and-the-blood-antique-trade
- Wells, Joseph T. "Money Laundering: Ring Around the White Collar." Journal of Accountancy, June 2003. https://www.journalofaccountancy.com/Issues/2003/Jun/MoneyLaunderingRingAroundTheWhiteCollar.htm
- Zill, Oriana and Lowell Bergman. "the Black Peso Money Laundering System." Frontline, PBS. (Aug. 14, 2018) https://www.pbs.org/wgbh/pages/frontline/shows/drugs/special/blackpeso.html
- Zapotosky, Matt et al. "Manafort convicted on 8 counts; mistrial declared on 10 others." The Washington Post. Aug. 1, 2018. (Sept. 4, 2018) https://www.washingtonpost.com/world/national-security/manafort-jury-suggests-it-cannot-come-to-a-consensus-on-a-single-count/2018/08/21/a2478ac0-a559-11e8-a656-943eefab5daf_story.html?utm_term=.a6a314f4d4a3
Last editorial update on Sep 20, 2018 02:27:11 pm.