Cryptocurrencies and stronger links with Asia creating new TBML opportunities

A US congressional hearing into Mexican drug cartels and border security held in December focused on how the cartels and transnational criminal organisations (TCOs) are making increasing use of cryptocurrency channels to conduct their money laundering operations.

Links with Asia are also strengthening, creating scenarios in which cryptocurrencies can be used in trade-based money laundering (TBML) operations.

Trade volumes

Deputy chief of operations in the Office of Global Enforcement at the US Drug Enforcement Administration (DEA), Paul Knierim, told the hearing that a shift towards Chinese and Asian money launderers is believed to be, in part, created by the large volume of both licit and illicit trade in goods and chemicals imported from China.

The DEA has already said that cryptocurrencies such as Bitcoin are becoming attractive for TCOs engaged in TBML, which involve the purchase of Chinese goods and hardware using illicit funds.

High-risk brokers

Cryptocurrencies are also attracting the attention of Chinese underground banking systems and so-called over-the-counter (OTC) cryptocurrency brokers who conduct very high-risk trading.

Typically, a high-risk OTC Bitcoin broker might use a foreign Bitcoin wallet-hosting service that does not properly conduct know-your-customer checks or anti-money laundering monitoring on Bitcoin purchases.

OTC Bitcoin brokers are particularly attractive to those who want to convert large quantities of cash into Bitcoin and use the cryptocurrency to facilitate the purchase of goods that can then be sold in the legitimate economy.



Categories: Trade Based Financial crimes News

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