Cryptocurrency: a “excellent” and “evolutionary” instrument for cash laundering

Cryptocurrency is a rapidly evolving technology, and due to its recent appearance on the market, authorities have not yet developed adequate expertise to investigate crimes that use it. Which makes it a very interesting tool for organized crimesays the report.

Report Shows Cryptocurrency Is Next Battle in War on Money Launderingnotes Daromir Rudnyckyj, professor of anthropology at the University of Victoria and director of the laboratory for the study of the evolution of money, the coin lab.

Unlike other issues addressed in this report, virtual goods are unique in that few people can easily describe what they are, let alone imagine how they could be used to launder money. »

a quote from Austin Cullen, excerpt from the British Columbia Money Laundering Commission of Inquiry Report

A professor at the University of Ottawa’s Telfer School of Management, Mark Tassé believes that the world of money laundering is undergoing a major transformation. When we talk about money laundering, we are no longer talking about suitcases full of money.he explains. It’s money laundering through crowdfunding platforms, online betting, cryptocurrencies, it’s not the same thing.

Blur the tracks at all costs

Using cryptocurrency is one of the easiest ways to launder moneysays Daromir Rudnyckyj.

There are several ways to launder the proceeds of crime with cryptocurrency.

The expert gives the example of unregulated platforms where you can exchange money for cryptocurrency: Now I could go to the local mall, use a cryptocurrency ATM, buy Bitcoins [avec de l’argent sale]send them to an exchange service and do what I want with them.

However, he points out that it takes some digital knowledge to achieve this.

Online gambling is also an attractive medium for criminal activities. We enter the site, open an account, use cryptocurrencies to buy tokens, play a game and then withdraw the rest of the tokensexplains Daromir Rudnyckyj.

Bitcoin ATMs can be used to launder money through the purchase of cryptocurrencies.

Photo: Associated Press/Charles Krupa

Donations to crowdfunding platforms are also very popular to cover your tracks. Crowdfunding campaigns can be launched anonymously and receive cryptocurrency donations from anyone.

Masarah Paquet-Clouston, a professor at the University of Montreal and an expert in cybercrime, however, qualifies the image. While cryptocurrency has interesting features to cover its tracks, it also has drawbacks.

There is the issue of cryptocurrency liquidity, it is not so easy to take out hundreds of thousands of dollars. We must also take into account the fluctuation of cryptocurrency. It is currently cascading down, we are going to lose a lot of value by making the investment She explains.

Cryptocurrency scattering techniques also involve huge fees, making them an expensive way to launder money.

A long way to go

The province should also regulate virtual currency exchange service providers, says the report of the Cullen commission. We understand that there is still a lot of work to be done to better regulate cryptocurrencies.

Daromir Rudnyckyj believes that the case of British Columbia is one case among others of a state that is slow to keep up with technological advances.

The market has always been ahead of the State, the paper money we use today was invented by private companies. Only centuries later did the state adopt it that way. […] There is a long history of the state’s backwardness in monetary technology. »

a quote from Daromir Rudnyckyj, Anthropologist at the University of Victoria and Director of the Counter Currency Lab

According to the report, it is also important for the province to direct its efforts to a specific entity, be it the British Columbia Financial Institutions Commission or any other body. The idea would be to develop internal competences that would be part of the governmental apparatus.

According to Masarah Paquet-Clouston, a first step has already been taken at the federal level to regulate cryptocurrency.

As of 2019, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, all cryptocurrency exchange services in Canada must register with the National Financial Transactions and Reports Analysis Center. We are currently enforcing the regulations that exist throughout the financial system in the cryptocurrency ecosystem. she says.

She, however, believes that much work on digital knowledge transmission still needs to be done among government actors, but also among the public.

While the two experts believe there will be a law on Canadian territory, it remains to be seen how this will translate in other parts of the world, given the international nature of the cryptocurrency. It’s really a global issue, not territory specificsays Daromir Rudnyckyj. We will have to wait to have regulations at the international level for these exchanges.

The Cryptocurrency Paradox

The idea behind cryptocurrency is to create a decentralized currency that is not regulated by banks. The challenge will be to build a regulatory framework that respects this spirit. The cryptocurrency system was developed to circumvent these laws. So, it is still interesting for us to try to reintroduce the legislative structures of the modern economy into this economy.emphasizes Masarah Paquet-Clouston.

She fears that a possible law will only send the sector to tax havens or create another money laundering strategy. They are tentacles, and it grows enormouslyshe concludes.

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