DEA Report: Bitcoin Used for Trade-Based Money Laundering

A new report from the U.S. Drug Enforcement Administration (DEA) claims that bitcoin is being used to facilitate trade-based money laundering (TBML) schemes.

Published by the Department of Justice, the report offers a broad overview of the U.S. government’s efforts to police the illicit drug trade. Included in the study, however, is a segment on cryptocurrencies, which notably states that criminals who launder funds through trading operations are using bitcoin, particularly firms based in China.

The DEA wrote:

“…many China-based firms manufacturing goods used in [trade-based money laundering] schemes now prefer to accept bitcoin. Bitcoin is widely popular in China because it can be used to anonymously transfer value overseas, circumventing China’s capital controls.”

The claim aside, the report doesn’t contain any specific figures on how much money is being laundered through this means. But it does detail efforts to obtain bitcoin holdings through regulated exchanges, stating that China-based groups prefer using the cryptocurrency in an effort to bypass capital controls.

Elsewhere in that section, the paper’s authors argue that over-the-counter (OTC) bitcoin brokers are helping to facilitate these cross-border transactions — a trend they write will continue.

“The increasing use of OTC bitcoin brokers, who are capable of transferring millions of dollars in bitcoin across international borders, as part of a capital flight scheme is expected to continue to intertwine criminal money laundering networks with capital flight,” the report states.

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