New cryptocurrency crime threats continue to emerge, including highly targeted mass cyber extortion, SIM swapping, and advanced cyberattacks on exchange personnel.Opportunities to launder cryptocurrencies will be greatly reduced throughout 20 if cryptocurrency AML regulations are successfully enacted and enforced globally.It also enlisted the IRS to examine 100% of cryptocurrency MSB transmitters for BSA compliance. US FinCEN clarified its stance on regulating mixing services and included crypto-to- crypto in its definition of money service businesses, MSBs, that are subject to the Bank Secrecy Act (BSA) rules.In the first three quarters of 2018, $927 million of cryptocurrency was stolen by hackers since the Q2 report, CipherTrace have recorded new reports of $166 million.Cryptocurrency money laundering on top exchanges involves a significant amount of bitcoin-some 380,000 bitcoins or $2.5 billion at today’s prices.36 times more criminal bitcoin is received by cryptocurrency exchanges in countries where AML is either weak or not enforced.97% of direct criminal bitcoin payments are sent to unregulated exchanges. There are likely 50% more criminal transactions than those that were traced for this report because criminals are typically very clever and deft at hiding their tracks. Moreover, these money-laundered funds comprise only the transactions that CipherTrace was able to directly monitor and designate as criminal or highly suspect. Since criminals use the funds to finance illicit activity-such as international drug gangs that use the laundered funds to produce and distribute more illegal substances-the benefits of well- enforced AML regimes to society are obvious. This extensive analysis shows that criminal transactions are reduced in the presence of strong AML regulation-with the obvious benefit of reducing illegal and illicit activity in general. Then, they can move funds into the global financial payments system with little risk of being detected. In fact, analysis of the data reveals that the top exchanges have laundered a significant amount of bitcoin, representing approximately $2.5 billion at today’s prices.Įssentially, criminals are flowing large amounts of dirty bitcoin into these poorly regulated exchanges and other services-such as mixers-turning it into “clean” cryptocurrencies. This analysis does not cover indirect criminal payments. They also show that cryptocurrency exchanges in countries with weak AML regulation receive nearly 5% of their payments directly from criminal sources. These results indicate that money laundering activity using cryptocurrencies is directly correlated to AML regulations and their enforcement on exchanges. 4.7% of Bitcoin Sent to Unregulated Exchanges Is Criminal In other words, 36 times more criminal bitcoin was received by crypto exchanges in countries where AML is either lax or lacking. The analysis also identified 380,155 bitcoins that were received by cryptocurrency exchanges directly from criminal sources between Januand September 20, 2018. An indirect payment is one that moves through one or more cryptocurrency wallets or addresses before being deposited into an exchange for conversion into either fiat currency or another cryptocurrency. Criminal Bitcoin Received by 20 Top ExchangesĪ direct payment is defined as one that moves from an identified criminal actor or service into a cryptocurrency exchange. 97% of Criminal Bitcoin Directly Received by Exchanges Flowed into Those Located in Countries with Weak AML LawsĪ quantitative analysis of all the transactions on the 20 top cryptocurrency exchanges globally revealed that 97% of direct bitcoin payments from identifiable criminal sources were received by unregulated cryptocurrency exchanges.
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