The number of incidents involving the use of cryptocurrency in funding terrorism and money laundering offences can be counted on a global scale. The value of crypto transactions involved in these crimes is surpassed many times over by the value of currency traded in these types of crimes. The use of cryptocurrency in illegal operations is so limited that Europol acknowledged it in a report released on Wednesday. The purpose of the report was to draw attention to the usage of digital assets in criminal behavior.
“Cryptocurrency remains appealing for criminals, primarily due to its pseudo-anonymous nature and the ease and speed with which funds can be sent anywhere in the world. However, the use of cryptocurrencies for illicit activities seems to comprise only a small part of the overall cryptocurrency economy, and it appears to be comparatively smaller than the amount of illicit funds involved in traditional finance.”
“Criminals and criminal networks involved in serious and organized crime also continue to rely on traditional fiat money and transactions to a large degree, in addition to emerging value transfer opportunities.”
Nonetheless, according to the research, networks employing cryptocurrencies for worldwide crimes are expanding, and some are even selling it as a service to other criminals.
According to UN data, however, money laundering is a global thriving business that now accounts for 2 – 5% of global GDP, or $800 billion to $2 trillion yearly. Annually, an additional $1.6 to 2.2 trillion is spent to facilitate illegal enterprises and transnational crime. Human trafficking is becoming a $150 billion-a-year industry. The majority of this is made possible by fiat money. Unfortunately, despite strong AML and anti-crime procedures, over 80% of this fiat money gets through regulated banks and financial institutions due to collaboration, corruption, state involvement, and other tolerances.
In fact, cryptocurrencies – whose transactions can be tracked at any moment on a blockchain digital ledger – are only useful to investigators because many other criminal and money laundering operations involve cash and can never be traced or evidenced. The major reason that such crimes involving money, regulated banks, and financial institutions are difficult to prosecute is not that crypto is used or that the crimes are hidden. Rather, it is due to financial corruption and the involvement of governments and prominent individuals in such transactions. In September 2021, the Financial Crimes Enforcement Network (“FinCEN”), a department under the United States Treasury Department, disclosed damaging information proving that global regulated banks continue to move billions of dollars in suspicious transactions for suspected terrorists.
According to FinCEN’s analysis, banks and financial institutions make large profits by transporting illicit monies, embezzled fortunes from developing countries, and money stolen through Ponzi schemes. Intelligence and law enforcement organizations are aware of the situation but are powerless to intervene. Indeed, the transparency of crypto and blockchains is the reason it is strongly opposed and cannot be enticing to anyone who wants these crimes to continue.
The Europol research does not specify how much cryptocurrency is involved in total crime, but it does state that the entire number of transactions associated with darknet marketplaces on the internet was estimated at 1.7 billion in 2020. It highlights Hydra, the largest active dark web marketplace, which it claims is responsible for 75% of all darknet transactions.
The paper then details additional “tens of millions of euros” in stolen funds discovered during a 2020 Europol money laundering probe conducted in 20 nations. Then, in 2021, German authorities assisted in the discovery of a €30 million investment fraud network spanning Europe.