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Why are cryptocurrencies so attractive for criminals, and how to fight against this?

AMLBot Team

Sep 7, 2021 • 4 min read

Today, cryptocurrencies are very often used in crimes and money laundering. Let’s consider why cryptocurrencies are so attractive for crimes and how they are used in money laundering. In addition, you will find out how to protect your cryptocurrency from “dirty money”.

Cryptocurrencies are very often involved in money laundering, fraud, drug trafficking, human trafficking, child exploitation, dark marketplace trading, cybercrime, terror funding, and others.

For instance, in 2020, around $350 million were paid out to hacker gangs DarkSide. Several forensics companies help track where assets flow to. Among these companies, we can emphasize Chainalysis.

According to the research of Chainalysis, in 2020, $5 billion were received by illegal entities.

At the beginning of the development of cryptocurrencies, frauds used cryptocurrency exchange to cash out stolen coins. During the period from 2011 to 2019, a lot of exchanges helped cash out from 60 to 80 percent of BTC transactions.

Government security organizations are intended to fight against money laundering by tracking illicit transactions and identifying the parties involved. For this, special tracking transactions services are used. One of the most reliable and effective services is AMLBot. It’s used by state structures as well as commercial companies, crypto holders, and traders. Commercial companies use AMLBot to protect their cryptocurrencies from “dirty money”.

In the previous article, we considered the consequences of the involvement of your cryptocurrencies in illegal activities and the identification of your cryptocurrencies as “dirty”. To avoid financial loss and the possibility of being banned on the cryptocurrency exchange, you need to protect your crypto assets.

Due to the implementation of KYC and AML software by crypto exchanges, the rate of stolen cryptocurrencies was reduced to 45 percent. So, the implementation of AMl services is very effective, according to the statistics.

So, let’s consider the main reasons for the involvement of cryptocurrencies in money laundering.

Why cryptocurrencies are used in money laundering

Anonymity

On the blockchain, all the transactions are accessible to each participant of the network. However, the identities of the transaction sender and receiver remain unknown. Therefore, all the transactions are anonymous, which is attractive for criminals.

All the transactions in the network are sent from one or more crypto addresses to one or several addresses. Each transaction is a set of characters which is resembling a usual bank account number.

While you send cryptocurrencies to another person, only addresses are traceable in the network, but people who send and receive these transactions are unknown.

So that, criminals can use cryptocurrencies to trade drugs, weapons, pornography, and others services and products from the “dark” market. In addition, cryptocurrencies are used for funding and donations for extremist organizations while staying anonymous.

Easy access and high speed

Cryptocurrency trading is accessible for everyone. To start trading cryptocurrencies, all you need is access to the Internet and a cryptocurrency wallet.

Any regulators and authorities do not control cryptocurrencies, and therefore, they are not validated by third parties. One more benefit of cryptocurrency transactions is high speed.

Easy storage and transfer

As compared to fiat money, cryptocurrencies are easy to store. To store cryptocurrencies, you don’t need any physical space. While cryptocurrency transactions are processed, third parties are not involved as during processing fiat money transactions. This makes cryptocurrency transactions very suitable for one-off sales of drugs or other forbidden products or services. Each owner of cryptocurrencies can easily transfer cryptocurrencies from one address to another both locally and internationally without the validation of third parties. In addition, cryptocurrencies can be sent between two different addresses that belong to one person or different owners, whether they are locals or foreigners. They don’t depend on banks or other financial structures.

All these features of cryptocurrencies make them attractive to money-laundering operations and criminal activities.

How to solve the problem of cryptocurrencies’ involvement in illegal activities?

A great solution to this problem is anti-money laundering services. The main function of the analytics solution is to trace transactions and reveal illegal transactions. State structures can use this software to fight against money laundering, fraud, drug trafficking, human trafficking, child exploitation, dark marketplace trading, and much more. Crypto holders and crypto traders can use this software to protect their crypto assets from “dirty money” and make their crypto trading safe.

So, AML services help catch criminals and terrorist elements by tracking transactions and addresses where the cryptocurrencies were sent from and received. This software allows tracking “dirty” transactions, thus enabling security and law enforcement organizations to solve the challenge of cryptocurrency anonymity.

One of the most effective AML tools is AMLBot based on innovative technology and analytics capabilities. It helps to reveal suspicious cryptocurrency transactions whether they went through mixers, shapeshifters, and privacy-enhanced wallets or other services, helping to enhance a level of anonymity. The service will figure out all the addresses where the cryptocurrency was earlier, including “darknet”, “dark market”, mixers, gaming and gambling services, and exchanges without KYC verification.

AMLBot offers its customers a wide range of benefits, including a user-friendly interface, free transaction checks, the possibility to trace around 1500 diverse cryptocurrencies, easy and fast registration without providing your private information, etc.

One of the main benefits of this service is API integration that allows incorporating this AML service in businesses and crypto exchanges to check a huge number of transactions simultaneously.

In conclusion, the effectiveness of AML services is difficult to overestimate. Their role is significant in enabling safe crypto trading and protecting honest market players from “dirty money” and involvement in illegal activities and terrorism. While using AML services, cryptocurrencies can become more popular among the vast audience.

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Cryptocurrencies are very often involved in money laundering, fraud, drug trafficking, human trafficking, child exploitation, dark marketplace trading, cybercrime, terror funding, and others.

For instance, in 2020, around $350 million were paid out to hacker gangs DarkSide. Several forensics companies help track where assets flow to Chainalysis was among these companies.

Do you want to find out the main reasons for often use of cryptocurrencies in crimes and how to protect your assets? Then read this article