Cash Still Supreme in Money Laundering, Over Cryptocurrencies: US Treasury Report
Summary:
A comprehensive risk assessment report from the US Treasury Department reveals that cash is still the primary medium for money laundering, not cryptocurrencies. It details how criminal organizations use cash for its anonymity, stability, and widespread acceptance. While acknowledging the misuse of cryptocurrencies in illicit activities, the report states their use in money laundering is much lower compared to cash. The document criticizes certain cryptocurrency exchanges and service providers for compliance failures that facilitate money laundering and highlights the increasing use of decentralized finance protocols and cryptocurrency mixing services for the transfer and laundering of illicit funds.
According to a comprehensive risk evaluation from the US Treasury Department, hard cash, rather than digital currencies, remains the preferred vehicle for money laundering by criminals and illicit organizations. The report, which encompasses three separate investigation pieces on money laundering, terrorist funding, and proliferation financing, provides insights into the ways criminal bodies attain, clean, and transport funds domestically and internationally. The findings indicate that criminals and international crime syndicates continue to favor cash because of its anonymity, stability, and widespread acceptability.
The report confirms that the role of virtual currencies in money laundering is much less than traditional currencies. It states, "The preferential use of cash by criminals for laundering illicit proceeds is largely due to the anonymity it provides. Frequently, they opt for US currency owing to its broad acceptance and stability." It also points out that transporting large amounts of cash, especially in US dollar denominations, remains a prevalent method of laundering illicit money within and outside the country, often crossing borders and being deposited in overseas banks.
The report cites that during 2023, the US Treasury Department successfully seized currency and financial instruments totaling $18 million in 1,480 inbound movements of funds. Whereas, during the outbound money movements, there were 1,010 seizures totaling approximately $53 million. The US Customs and Border Protection office is tasked with scanning non-residents, American citizens, and imported goods across more than 300 entry points.
According to US law enforcement reports, cash, linked to domestic crime, is transported extensively on US highways, and private aircraft are increasingly employed to smuggle large sums of cash. "Aircraft provide a quicker means to transfer currency into, out of and around the US over expansive distances than vehicles or by bundling cash on a person." the report explains. Small airports along the Mexican border, in particular, have minimal security, thereby enabling aerial cash smuggling.
While the report acknowledges that digital currencies' use in money laundering is much lower than traditional currencies and other standard methods, it also notes that cryptocurrencies are being misused in instances including ransomware, fraud, drug and human trafficking, and more illicit activities.
The report's section on virtual assets emphasizes the anti-money laundering responsibilities of cryptocurrency exchanges and service providers and their failure to comply. It asserts that these companies, by failing to maintain AML and counter-terror financing controls or sanctions obligations, can inadvertently enable criminals to exploit their platforms. The report highlights the late 2023 settlement of $4.3 billion involving US crypto-finance company Binance.US and US authorities as a prime example of compliance failures that resulted in money laundering abuse of exchanges.
Furthermore, the report notes that decentralized finance (DeFi) protocols are increasingly being used to transfer and hide illegal funds. Cryptocurrency mixing services also pose an emerging method for criminals to transport funds, as they effectively conceal the source, sum, and destination involved in a deal.
Published At
2/8/2024 1:32:37 PM
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