Cryptocurrency and Money Laundering

Research summary

A study by Pol (2020) estimated that only 0.1% of global criminal finances are captured by traditional approaches to anti-money laundering (AML).  Recent literature and discussions among law enforcement agencies, academics, banks, other financial institutions and financial regulators points to an emerging area of crime in which cryptocurrencies are or will be exploited to process illicit funds generated through crime. The role that cryptocurrencies do or could play in the facilitation of money laundering is evolving as are cryptocurrencies and associated technologies.  This will further complicate the AML task. This project will review the role that cryptocurrencies do or might play in the facilitation of money laundering by undertaking an extensive futures-oriented review. The review will analyse numerous criminogenic enablers, specific money laundering and terrorist financing possibilities, relevant stakeholders and risk characteristics relating to distributed ledger technologies and also carry out a systematic appraisal of potential challenges, opportunities, and threats. The findings of the project will offer insights into different cryptocurrency-enabled money laundering and terrorist financing risks with the aim of informing the design of long-term strategies to address the issue.