Money Laundering

What Is Money Laundering?

Money laundering refers to disguising the origins of illicitly obtained funds by making them appear legitimate.

Typically, individuals involved in scams and criminal activities employ money laundering techniques to conceal their cash flows and the source of their income.

Money Laundering

Money Laundering Explanation | Source: Investopedia

Historical Origins and Strategies for Evading Detection

The practice dates back to the 1930s, initially used to hide proceeds from illegal alcohol sales during the Prohibition era in the United States.

The primary objective of money laundering is to evade detection by financial institutions and authorities, often through the use of shell companies, offshore banks, and fraudulent fronts.

In some cases, individuals engaged in money laundering may also invest in assets like art and luxury goods to avoid scrutiny and the need to disclose their illicit funds.

Implementation of Anti-Money Laundering Laws

Regarding cryptocurrencies, some politicians worldwide have labeled them as a means of money laundering.

In response to concerns about criminality and fraud, several countries, including Turkey, North Macedonia, Bolivia, and Algeria, have implemented anti-cryptocurrency anti-money laundering (AML) laws to regulate and restrict their use.

Dispelling Misconceptions

However, cryptocurrencies are not inherently conducive to money laundering.

The transparency of the blockchain, a public ledger that records all transactions immutably, makes cryptocurrencies pseudonymous and traceable.

Furthermore, many cryptocurrency exchanges now enforce Know Your Customer (KYC) procedures to prevent money laundering and other illicit activities.

What Percentage of Crypto Is Used for Money Laundering?

Determining the precise percentage of cryptocurrency used for money laundering is challenging, as illegal activities are often difficult to quantify and measure.