SWIFT Says Criminals Prefer Cash for Money Laundering, Not Cryptocurrency

A new report by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) says cryptocurrency is seldom used for money laundering activities compared to fiat or other traditional methods.

Despite the perception that crypto assets are a preferred haven for illegally acquired funds, criminals prefer to launder proceeds through mules, front companies, or cash businesses as well as investing it into crime, it said.

“Identified cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods,” SWIFT noted, in a report titled “Follow The Money”, published last week.

Money laundering remains a huge problem for economies throughout the world. According to the UN’s Office on Drugs and Crime, around $800 billion to $2 trillion, or the equivalent of between 2% to 5% of global GDP, is laundered through cash channels each year. But crypto does not feature prominently.

The money laundering report, compiled in collaboration with financial research firm Bae Systems, looks at how criminals spin money through the financial system to obscure its fraudulent origins and ownership before reintroducing it back into the legitimate economy.

SWIFT, an interbank messaging firm, said while virtual currency accounts for fewer cases, some of these are high-profile. In one of the featured cases, a cyber-crime group allegedly converted funds stolen through ATM cashouts into crypto.

Another case involved arrest and prosecution after authorities found 15,000 bitcoin (BTC), two sports cars, and jewelry worth $557,000 at the group leader’s house. The authors observed that privacy-centered digital assets like Monero or Zcash could in the future become attractive to criminals, saying:

The raft of alternative cryptocurrencies that offer greater anonymity, as well as services like mixers and tumblers that help obscure the source of funds by blending potentially identifiable cryptocurrency funds with large amounts of other funds, could boost the appeal of cryptocurrency for nefarious purposes.

SWIFT explained that online-thieves might seek to use crypto as a means for obfuscating and laundering the funds stolen during a cyber-heist, before making various purchases in order to integrate the money

“In this instance, cyber-criminals might launder the stolen funds at a bitcoin farm, before using financial platforms to load prepaid cards with bitcoin,” said the report.

The alleged North Korea-linked Lazarus Group heist, involving the transfer of stolen funds across the crypto ecosystem, as well as the use of Chinese facilitators to cash stolen crypto assets provides insight into one of the methods used. Prepaid cards linked to crypto wallets can also facilitate the reversion of stolen crypto back to fiat in small amounts.

Another layering technique involves converting cryptocurrency into tangible assets. Per the report, “there are dedicated sites that facilitate the purchase of high-end land and property assets across the world, including luxury penthouses and tropical islands, as well as watches, jewelry, gold bars, and fine arts.”

SWIFT notes concern within the financial system, that peer-to-peer purchases on online markets for luxury assets help to keep ill-gotten wealth concealed.

What do you think about money laundering involving cryptocurrency? Let us know in the comments section below.

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via Jeffrey Gogo