Europol recently confirmed that about £4b is being laundered via cryptocurrencies.
Rob Wainwright, the director of the agency, while speaking to the BBC Panorama urged the regulators and industry leaders to work together to tackle the menace. He gave an estimate that 3-4% of the £100b accrued from illicit proceeds are laundered through digital currencies.
Bitcoin is suspected to be the digital currency used in laundering the illicit funds. Although there are many, it happens to be the most popular and most valuable. Unlike fiat currencies, cryptocurrencies are not regulated or controlled by any body, making it a safe haven for crime. The anonymous nature of the currency keeps attracting criminals because transactions are untraceable, making it difficult for the authority to track down suspected criminals
The digital currencies are created through a process called mining by solving a series of complex mathematical equations. All transactions are virtual and the identities of traders and buyers remain anonymous.
The agency’s director, Mr. Wainwright has expressed his frustration over the inability of the authority to freeze the assets of the hoodlums. He said: “They are not banks and governed by a central authority so the police cannot monitor those transactions. And if they do identify them as criminals, they have no way to freeze the unlike in the banking system”.
While the authority has been seeking means to bring perpetrators to book, the money launders have resorted to using “money mules” to aid transactions. Firstly, the generated funds are converted to bitcoins; secondly, they are splited into smaller units to the mules who later convert the digital currencies into hard cash before returning individually to the criminals.
This has become the trend for drug traffickers cross Europe and is causing a great concern for the enforcement agencies. He urged those running the bitcoin industries to cooperate with the authority to fish out the criminals. “They have to take a responsible action and collaborate with us when we are investigating very large-scale crime”, he said.
Nevertheless, It’s almost uncertain that the people running the bitcoin industries will be willing to cooperate with the enforcement agency. Should the digital currencies be regulated, the prime aspect of it will obviously disappear, which is the “libertarian freedom” that the exchangers enjoy. Moreover, even though the miners claim that the major idea is to help people do virtual transactions with ease, they know fairly well that trading in digital currencies attract many people including criminals because of the autonomy in trading. Once this is lost, it could be the end of bitcoin and its rivals and siblings.