Crypto developers have long tried to distance themselves from the association which Bitcoin gained early in its creation with criminal enterprises, and to a large extent they have been successful. Still, according to Asia Times, Chinese drug cartels are turning towards crypto to launder money, with the head of a Homeland Security Taskforce claiming that there has been a ‘recent significant increase in money laundering using cryptocurrency.’
While crypto is a visible and much hyped potential tool for criminals to launder money, it still only represents a tiny fraction of the $2 Trillion in money laundered annualy. Nonetheless, the DEA in a recent conference noted that transnational criminal organizations (TCOs) are becoming more savvy with their use of crypto, and are using it effectively to evade law enforcement, especially surrounding the drug trade in Asia.
One of the problems is that high-risk OTC Bitcoin trading looks very similar to the transfer or large amounts of money across national borders, either involving the trade of drugs or simply money laundering.
A Forbes article recently made the case that law enforcement, at least in the US, is becoming increasingly savvy in regards to detecting anomolies and enforcing KYC and AML requirements on crypto trading platforms. Still, sufficiently motivated criminals will continue to find ways to become increasingly anonymous and difficult to locate, though all criminal enterprises must at some point exchange cryptocurrency for fiat currency in order to use it.
The US government has recently tripled their budget for blockchain analysis, demonstrating that blockchain will be a part of law enforcement for the forseeable future. As crypto becomes more mainstream, it will be interesting to see if the criminal element has an easier time hiding in plain sight, or if blockchain developers will effectively find ways to self-police.