Home Cryptocurrency There’s Easier Ways To Launder Money Than Using Cryptocurrencies

There’s Easier Ways To Launder Money Than Using Cryptocurrencies


Bitcoin and other cryptocurrencies are have a reputation for facilitating money laundering so when a company like Facebook announces they are creating a digital coin, US regulators worry. People have heard of the dark web where stolen identities and illegal drugs are for sale and payments are made in untraceable cryptocurrencies. Criminals use digital coins for illicit payments, but the vast majority of people using Bitcoin are engaging in legal activity, primarily investing. Only about 0.5 percent of transactions with bitcoin are unlawful. 

Facebook’s cryptocurrency transparent transaction ledger will fall under the Bank Secrecy Act and is already required to have anti-money laundering measures in place. Regulatory scrutiny rarely takes into account how most cryptocurrency transactions are already transparent. Bitcoin stores transactions on a public ledger and while they don’t store identities, it’s possible to extract IP addresses and identify the source of transactions. Not all the politicians of those pushing for regulation of cryptocurrencies, especially Facebook’s Libre, understand blockchain technology well enough to distinguish between virtually untraceable transactions and transparent ones.

Criminals who want to launder money use cash, which is completely untraceable. There are numerous ways to make money gained illegally to appear legitimate. Funneling money through shell companies in offshore tax havens is a popular way to launder money with cryptocurrencies. You can launder money through casinos as well, buying chips and then cashing most of them back in as winnings.

Treasury agents hope dumb criminals continue to believe cryptocurrencies are untraceable since it is so much easier to trace bitcoin transactions than it is to trace cash transactions. There are ways to hide bitcoin transactions with tumblers which bounce the bitcoin between various IP addresses. It’s complicated and expensive; you need at least three bitcoin wallets to make transactions virtually untraceable. It’s so much easier to use cash.