According to a recent report from Europol, the use of cash in financing crime has a higher rate than cryptocurrencies, however, because crypto transactions are traceable and fiat isn’t, the former is seen as having higher involvement in crimes.
The amount of examples of cryptocurrencies being used to fund terrorism and money laundering is truly countable on a global scale. The value of crypto transactions used in these types of crimes is dwarfed by the amount of cash used in activities.
Crypto’s use in illegal activities is so limited that Europol acknowledged it in a study released on Wednesday. The purpose of the report was to draw attention to the usage of digital assets in criminal behaviour.
“Cryptocurrency remains appealing for criminals, primarily due to its pseudo-anonymous nature and the ease and speed with which funds can be sent anywhere in the world. However, the use of cryptocurrencies for illicit activities seems to comprise only a small part of the overall cryptocurrency economy, and it appears to be comparatively smaller than the amount of illicit funds involved in traditional finance.”
“Criminals and criminal networks involved in serious and organized crime also continue to rely on traditional fiat money and transactions to a large degree, in addition to emerging value transfer opportunities.”
Despite this, the research claims that networks employing bitcoins for international crimes are continuing to grow, with some even offering the service to other criminals.
Fiat usage in crimes
Money laundering, according to United Nations data, is now a global booming business, accounting for 2–5% of global GDP, or $800 billion to $2 trillion yearly. An additional $1.6 to 2.2 trillion is spent each year to aid illegal operations and transnational crime.
Human trafficking has grown into a $150 billion a year industry. The majority of this is made possible by fiat money. Unfortunately, despite strong AML and anticrime procedures, over 80% of this fiat money goes through regulated banks and financial institutions due to collaboration, corruption, state involvement, and other tolerances.
In fact, cryptocurrencies whose transactions can be recorded at any moment on a blockchain digital ledger are only useful to investigators because many other illegal and money laundering activities involving cash can never be traced or documented.
It is not because crypto is used or because the crimes are hidden that such crimes involving fiat, regulated banks, and financial institutions are difficult to stop. Rather, it is due to financial corruption and the participation of governments and prominent individuals in such transactions.
In September 2021, the US Treasury Department‘s Financial Crimes Enforcement Network (“FinCEN”) disclosed damaging files proving that global regulated banks continue to move billions of dollars in dubious transactions for suspected terrorists, kleptocrats, and drug lords.
FinCEN’s research demonstrates that shifting illicit monies, riches embezzled from poor countries, and money taken through Ponzi schemes generates significant profits for banks and financial organizations.
Crypto usage in crime is low
Intelligence and law enforcement organizations are aware of the situation but are powerless to intervene. Indeed, the openness of crypto and blockchains is one of the reasons why it is passionately opposed and cannot be enticing to anyone who wants to see these crimes continue.
Europol’s report does not specify how much cryptocurrency is used in the crime, but it does state that the overall number of transactions on darknet markets on the internet was anticipated to be 1.7 billion in 2020. It mentions Hydra, the largest active dark web marketplace, as being responsible for 75% of all darknet transactions.
The report goes on to detail additional “tens of millions of euros” in stolen monies discovered during a Europol money laundering probe initiated in 20 nations in 2020. Then, in 2021, German authorities assisted in the discovery of a €30 million investment fraud network operating across Europe.
