Cryptocurrencies such as Bitcoin are playing an increasing role in trade-based money laundering (TBML) schemes according to Global Financial Integrity (GFI).
The non-profit organisation that researches and lobbies for actions against illicit fund flows (IFFs) says that in China there is a growing connection between TBML, the underground banking system and cryptocurrencies.
Some Chinese underground banks have been known to accept cryptocurrencies and launder the money within China for clients all over the world using over-the-counter Bitcoin brokers according to GFI.
It says these brokers facilitate large sales of Bitcoin by connecting parties or via TBML schemes.
Circumventing capital controls
Chinese based firms manufacturing goods used in TBML schemes now prefer to accept Bitcoin as it allows them to circumvent China’s capital controls according to GFI.
It says that cryptocurrencies typically have several obfuscating features, such as their relative anonymity, that make them ideal for criminal activity.
GFI says that cryptocurrencies and other technological advances create new tools for criminals to use and pose a constantly evolving challenge to law enforcement.
Cryptocurrencies are just one example of new and complex monetary instruments for financial regulatory agencies to understand and prevent abuse, and the IFFs of the future will be defined by even greater complexity GFI concludes.
Categories: Trade Based Financial crimes News