Do not invest more money than you can afford to lose.
Between GBP 3 and 4 billion of criminal money in Europe is laundered though cryptocurrencies, the head of Europol Rob Wainright told BBC.
According to the estimates of Europol, the European Union Agency for Law Enforcement Cooperation, about 3-4% of the GBP 100 billion from illicit activities in Europe are laundered through cryptocurrencies.
“It’s growing quite quickly and we’re quite concerned,” told Wainwright and called on the industry leaders and the regulators to work together to tackle the problem.
Due to the largely anonymous and decentralized nature of the cryptocurrencies, they are mostly unregulated and cannot be controlled by the governments and the central banks, at least for now, are hard to trace and are often preferred by criminals.
Wainwright told BBC that even if the banks and the police manage to monitor the transactions in cryptocurrencies, they can rarely seize them. “And if they do identify them as criminal they have no way to freeze the assets unlike in the regular banking system,” he said.
Even though Europol has mostly figured out how the money laundering process happens, there is little it can do for now, until robust regulations are introduced.
According to Wainwright, the criminals convert the illegal proceeds into bitcoins, then split it in parts and hand them over to the “money mules”. Those are people who are seemingly not associated with any criminal activities. They trade the bitcoins for fiat currencies and hand them over back to the criminals. “It’s very difficult for the police in most cases to identify who is cashing this out,” Wainwright said.
Another part of the billions of illegal proceeds, mostly from street sales of drugs across Europe, is being converted into bitcoins, he noted.
Despite being unregulated, the cryptocurrency exchange industry in Europe has in place some KYC and AML procedures. In most cases, one has to provide a copy of a government ID and proof of residence, before being allowed to trade on European exchanges, particularly in cryptocurrencies for fiat currencies and the other way around. However, those requirements can be bypassed with some ingenuity. Besides, it is not necessary to use EU exchanges for the purpose.
