Recently released research by CipherTrace has been making the news partly because of some surprising stats. For instance, The Cryptocurrency Anti-Money Laundering Report 2018 Q2 reveals that theft of cryptocurrencies from exchanges skyrocketed in the first half of this year to three times the level seen for the whole of 2017. For all of 2018, these losses could total US$1.5 billion. Some of the more notable coverage of this research included write ups by American Banker, Reuters and eWeek.
The report covered other important trends, such as a preference for Bitcoin is a digital currency (also called crypto-currency) ... More among cyber extortionists, dark markets and ransomware perpetrators. In addition, whether stolen from exchanges or gained through illegal activities, all this “dirty” money needs to be laundered before criminals can use it in the real world. This fact resulted in a three-fold increase in associated money laundering during the last half of 2017.
Not your grandfather’s money laundering
The report also includes an explanation of how this cyber money laundering differs from the old-fashioned kind, which usually involved real estate, gold and jewels or businesses that acted as fronts for mixing legitimate money with the dirty stuff. Crypto money laundering is enabled by much more high-tech methods, such as mixers, chain hopping and privacy coins.
Regulators around the globe react
Not surprisingly the rise in money laundering as a result of the increased theft of cryptocurrencies and their use by criminals to hide illegal activity and profits has caught the watchful eyes of regulators. For example, the US FinCEN has vowed to enforce Anti-Money Laundering (AML) regulations globally. “We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. AML laws,” said Kevin O’Connor of FinCEN. FATF has also made AML regulation and international cooperation a priority, as has the U.S. Congress.
“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. AML laws.” FinCEN
These exchange robberies and use of cryptocurrency in criminal activity are driving a significant increase in demand for money laundering services. All these developments are also creating more demand for crypto AML compliance tools. Anticipating this trend, CipherTrace has accelerated the refinement of its industry-leading Cryptocurrency Intelligence platform, which includes a recently launched AML Compliance Solution.
The platform’s sophisticated technology tracks cryptocurrency through the Blockchain ecosystem, helping exchanges, hedge funds, ICOs, money transfer agents and banks safely participate in crypto asset markets while minimizing compliance efforts and costs.T his fast and powerful platform—which can handle massive numbers of transactions with its Application Programing Interface (API)—visually traces the flow of tainted funds through nefarious locations and risky transactions.
This combined cryptocurrency intelligence, bitcoin forensics and crypto transaction risk scoring helps businesses keep bad actors off their financial networks. In so doing the CipherTrace solution works to assure compliance and build trust in the blockchain economy for all participants.
This is the first in a series of reports. Each quarter CipherTrace will dive deep into other aspects of crypto money laundering. Please let us know what topics you would like covered.