Cryptocurrency used in money laundering act
Billions of dollars are being laundered by criminals through cryptocurrency according to Europol. Rob Wainwright, agency’s director said that industry lenders and regulators need to work side by side to stop this act. This warning came after Bitcoin’s value dropped by almost half last December.
The European Union Agency for Law Enforcement Cooperation or Europol, said that the illicit proceeds in Europe came from cryptocurrency. Estimating about three to four percent of the £100bn are laundered through cryptocurrencies.
“It’s growing quite quickly and we’re quite concerned,” he said.
There are different kinds of cryptocurrencies out there. But the most famous and a lot of people are engaged in is the Bitcoin. These are online money or currencies that are the alternatives of actual money. Like the dollars, pounds, or euros. However, this one is not printed in paper or engraved in metal. That means, you can’t have it physically. Unlike the traditional and usual money that we use. Also it’s not controlled or regulated by the government or banks.
Instead, digital codes are created by computers running mathematical equations, a process called “mining”. Then a network of computers across the world keeps track of the transactions made online. Customers are anonymous because they’re only using unique virtual addresses. Now, police are having a hard time tracking these criminals. That’s because it is difficult for them to identify whoever is making movements of their payments and their money.
“They’re not banks and governed by a central authority so the police cannot monitor those transactions. And if they do identify them as criminal they have no way to freeze the assets unlike in the regular banking system,” said Mr. Wainwright.
Another problem Europol has identified involves the method on how they launder the money.
The proceeds from criminal acts, like gambling or drug business, are being converted into bitcoins. Then they split it into smaller amounts and distribute it to people not associated with them. These people are acting as “money mules”.
Then after that, these money mules convert the bitcoin to cash and return it back to the criminals. Mr. Wainwright said, “It’s very difficult for the police in most cases to identify who is cashing this out.”
These problems are not only for the police to solve but also industries or people behind cryptocurrencies should take responsibility.