Cyber laundering: Money laundering from fiat money to cryptocurrency

Abstract

Money laundering involves placement, layering, and integration to transfer and convert illicit fiat currency into legitimate assets. The process often relies on multiple local and remote participants that use numerous financial institutions and complex instruments to obfuscate the trail and origin of illicit funds. The use of the Internet, combined with cryptocurrency and blockchain development, has enabled money launderers to expand their activities into cyberspace. Cyber laundering provides quick, easy, low-cost, anonymous transactions and circumvents traditional detection techniques used by the authorities. In contrast to traditional money laundering, cyber money laundering is relatively new, and cryptocurrency and the blockchain make it technically complex. The inherent complexity and reach of the technology have contributed to in-cohesive and fragmented regulatory and enforcement structures across jurisdictions. This chapter presents an overview and comparison of traditional and cyber money laundering methods and operationally compares traditional and cyber money laundering. The work also covers existing legal and regulatory frameworks, identifies areas of necessary improvement, and proposes potential technical and nontechnical anti-cyber laundering remedies.