Practical Fraud Prevention

Chapter 22. Cryptocurrency Money Laundering

How do you hold a moonbeam in your hand?

Rodgers and Hammerstein¹

It wasn’t that long ago that when someone mentioned anti–money laundering (AML) work, they implicitly referred to the world of banking. Now, though, some of the greatest AML challenges are those faced by professionals trying to prevent money laundering through cryptocurrency. The basic crime is the same as in the ordinary financial system: moving money gained through criminal activity around enough times, and with sufficient obfuscation, that it comes out looking “clean” or as though it hadn’t been gained illicitly. However, many of the solutions tailored over the years to fit the traditional banking world aren’t effective, or aren’t as effective, against cryptocurrency money laundering attempts, meaning teams need to get creative about how to remain compliant. That’s especially true if they want to follow not just the letter of the law, but also its spirit.

Cryptocurrency: More Regulated Than You Think, and Likely to Become More So

Many consumers aren’t aware of the extent to which cryptocurrency is increasingly governed by the same sorts of regulatory considerations as traditional banking, but the increasing regulatory environment is something no company involved in cryptocurrency, or in services related to it, can afford to ignore. In fact, in the United States, FinCEN has had regulation in place for a number of years now. In Europe it was the 5th Anti-Money Laundering ...