Criminals are swiftly discovering the potential of cryptocurrencies to rinse illicit money, according to a new study. Cyber attacks are responsible for more than $1.5 trillion in annual losses.
Most money launderers are still relying on conventional schemes to rinse criminal funds, but several million-dollar cases involving cryptocurrencies are a sign of things to come, according to a study by Swift and Bae Systems. One problem? The sheer number of digital coins, the international payments network noted.
«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 said.
Hits Home for Swiss
The issue is of particular relevance to Switzerland, where recent global money-laundering scandals like PDVSA and 1MDB have hit home. The country’s regulator has approved two digital asset banks – Seba and Sygnum – and is vetting crypto broker Bitcoin Suisse as well.
A major international case cited by Swift involved a trove of bitcoin valued at $109 million, two sports cars, and jewelry worth north of $500,000. The scheme was as international as any global graft scheme: the bitcoin was mined in East Asia, but most of the alleged criminals were Eastern European, and the money was spent in Western Europe.
Circumventing Sanctions
Cryptocurrency also represents a huge opportunity for rogue players like Lazarus, which U.S. officials have identified as North Korea-backed hackers. Typically under heavy sanction by the Financial Action Task Force, or FATF, these types of actors are using crypto to circumvent surveillance at banks and other financial institutions.
The possibilities for criminals include pre-paid cryptocurrency cards which can be used to buy assets like jewelry, cars, or even property, then sold – to rinse the money. Online peer-to-peer platforms which accept crypt also represent a risk, Swift noted: coins can buy high-end property and other luxury assets like fine art or physical gold, without being caught by traditional banking checks.
Collaboration and Awareness
Cybersecurity forms the backbone of Swift's view: «Large-scale cyber heist attempts are expected to continue and to evolve – the attackers are focused on going after large-scale payouts and will continue to mount attacks to achieve their aims.»
In addition, hackers desire disruption and destabilization of the financial system as much as they want to simply steal money, Swift noted. It urged collaboration between nations as well as among financial institutions themselves, more attention on so-called money muling activities and the use of «front» companies, and awareness of newer money-laundering schemes.
