Cryptocurrency: A “perfect” and “evolving” tool for laundering money

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 using it. Which makes it a very interesting tool for organized crimesays the report.

Report Shows Cryptocurrency is the Next Battle in the War on Money Launderingobserves Daromir Rudnyckyj, professor of anthropology at the University of Victoria and director of the laboratory for the study of the evolution of money, the Counter Currency Lab.

Unlike other issues covered in this report, virtual goods are unique because few people can describe what it is with ease, let alone imagine how it could be used to launder money. »

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

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

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 proceeds of crime with cryptocurrency.

The specialist gives the example of unregulated platforms where you can exchange money for cryptocurrency: I could now 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 you need to have some digital knowledge to achieve this.

Online gambling is also an attractive medium for criminal activity. We go to the website, we open an account, we use cryptocurrency to buy tokens, we play a game, then we cash out the rest of the tokensexplains Daromir Rudnyckyj.

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

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, professor at the University of Montreal and expert in cybercrime, however, qualifies the picture. Although cryptocurrency has interesting features to cover its tracks, it also has disadvantages.

There is the issue of the liquidity of cryptocurrency, it is not that easy to take out hundreds of thousands of dollars. We must also take into account the fluctuation of the cryptocurrency. Currently, it’s in a downward cascade, we’re going to lose a lot of value by making the investment she explains.

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

A long way to go

The Province Must Also Regulate Virtual Currency Exchange Service Providers, says the Cullen commission report. We understand that there is still a lot of work to do to better regulate cryptocurrency.

Daromir Rudnyckyj believes that the case of British Columbia is one case among others of a state that is slow to follow 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 in this form. […] There is a long history of the state lagging behind monetary technology. »

A quote from Daromir Rudnyckyj, Anthropologist, University of Victoria and Director, Counter Currency Lab

According to the report, it is also important that the province channel its efforts to a specific entity, be it the Financial Institutions Commission of British Columbia or any other body. The idea would be to develop internal expertise that would be part of the government 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 imposing the regulations that exist throughout the financial system on the cryptocurrency ecosystem she says.

She nevertheless believes that a great deal of digital knowledge transmission work remains to be done among government actors, but also among the public.

Although the two specialists believe that there will be a law on Canadian territory, it remains to be seen how this will translate elsewhere in the world, given the international nature of cryptocurrency. It’s really a global issue, it’s not specific to the territorysays 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 that we try to reintroduce the legislative structures of the modern economy on this economyemphasizes Masarah Paquet-Clouston.

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

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Cryptocurrency: A “perfect” and “evolving” tool for laundering money

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