Cryptocurrency and Money Laundering

Abstract

Cryptocurrency, a form of virtual currency, is increasingly pervasive in the modern society. People can use Bitcoin, Ether or Dogecoin to buy a range of products and services with ease and convenience. Yet, beneath the popularity of cryptocurrency is an emerging socio-legal concern: money laundering. Using the information collected from web sources, this brief paper taps into how cryptocurrency money laundering works and what measures can be undertaken to curtail digital crime. In view of the extant information, the paper found that a mixer is required as a ‘middle man’ to convert identifiable crypto-tokens into unidentifiable clean ones thereby delivering them to new wallet(s). In this manner, the origins of these tokens can be obscured, and the new tokens can be accessed and used legally. Many platforms and channels can serve as the mixer to proceed with illegal activities, including casinos, dark web marketplaces, and p2p networks. In considering the ways to tackle such digital crime in jurisdictions with limited oversight, the paper proposes to adopt measures in the Anti-Money Laundering initiatives already implemented in Hong Kong, the United States, and Singapore – especially, the need to strengthen recordkeeping to enhance the traceability and trackability of cryptocurrencies. Meanwhile, laws and rules associated with digital crime shall also be reshaped for risk mitigation.