Money laundering: why is it so hard with crypto?

Laundering money using crypto is getting harder

Cryptocurrencies and particularly bitcoin have had a nasty stigma around them. A lot of people have this idea that they are used to buy drugs or whatever illicit service and launder money. This may have been true to some extent in the past when bitcoin was on the fringes and the authorities didn’t watch it as closely, but today this is just not the case.

However, recent research revealed that in Japan, for instance, the country where cryptos have been given the green light by the authorities more than anywhere else in the world, laundering illicit funds via bitcoin makes up less than 1% of all money laundering cases.

So how is bitcoin involved in money laundering and why this problem is not as big as mainstream media wants you to think it is? Let’s find out.

What money laundering in crypto looks like

Remember ‘Breaking bad’? Bryan Cranston’s character becomes a drug lord and in the process gets filthy rich, but he has one problem, what does he do with all his newfound dirty money? He buys a car wash to clean his dirty business, places the money into the system by creating a bunch of fake orders and withdraws the money clean and washed up as profits from the legal activity.

This is but one example of what money laundering looks like. In crypto, the concept is the same, but the process is much different.

At the placement stage, criminals convert dirty money into cryptocurrency which could be obtained via licensed exchanges, ICOs or peer-to-peer transactions.

At the layering stage, cryptos are transferred between wallets and services attempting to hide all traces. The technologies offered by untraceable coins, such as Verge, Dash and Monero, make it even easier to throw authorities off.

Finally, at the integration stage, cryptocurrencies are converted back into fiat or used to purchase whatever the person would like.

How Cryptopay fights money laundering

Cryptopay and other companies in the industry have been pushing bitcoin to mainstream adoption and at the same time have been making it harder for criminals to use cryptocurrencies for money laundering due to all the KYC and AML procedures we meticulously follow. Dealing with dirty money and criminals neither suits our interests morally nor from a business perspective, and being fully compliant with relevant laws and regulations ensures this.

Dealing with dirty money and criminals neither suits our interests morally nor from a business perspective, and being fully compliant with relevant laws and regulations ensures this.

We strive to develop a system that will let us detect, monitor and report all the risks associated with money laundering. Whenever new clients sign up for our services, they have to pass through a rigorous process of verification to prove their identity.

What our experts say

Alexey Gunyashov, Head of Compliance at Cryptopay
“The majority of suspicious activity is carried out in well-known patterns and we can identify suspicious accounts at the early stage.
The monitoring system evaluates dozens of different fraud signals, detects connections between users and known fraudsters, and runs the complex analysis to predict whether someone is fraudulent or not in real-time. We are constantly adding new patterns to stay up-to-date with ever-changing methods and techniques that are used by fraudsters.”