20, Dutch police arrested 10 in the Netherlands as part of colu blockchain bitcoin international investigation into money laundering through sales of the virtual currency bitcoin, according to The Guardian article, Ten arrested in Netherlands over bitcoin money-laundering allegations. While today’s leading virtual currencies, like bitcoin, may or may not pass the test of time, the underlying technology is here to stay.
How do we prevent criminals from abusing the system in this still fairly new technology? Fraud examiners should seriously consider what the future of money laundering involving virtual currencies might look like so they can close the gap between the good guys and the bad guys. Examining different types of virtual currencies and applications that have been developed around them gains us a better understanding of what makes them inherently high risk for money laundering and fraud. Other virtual currencies, like bitcoin, store all transactions in a public ledger called “The Blockchain. The Blockchain only records the transactions, not the identities, of the users. Dark Wallet According to the Wired article, ‘Dark Wallet’ Is About to Make Bitcoin Money Laundering Easier Than Ever, by Andy Greenberg, April 29, 2014, this bitcoin application boosts virtual currency to another level by making it practically impossible to follow the trail of virtual currency via encrypting and mixing all user payments. According to the BBC News article, High Currency in the Dark Wallet, by Jen Copestake, Sept.
19, 2014, Taaki said, “You can’t stop using technology because of your personal bias. The ability to conduct rapid and anonymous transactions through multiple jurisdictions makes virtual currency a very attractive tool to money launderers. BTC Jam In the book Money Laundering: A Guide for Criminal Investigation, author John Madinger draws from the plot of the police action film “Lethal Weapon 2” to illustrate a loan-back money laundering scheme. Imagine a similar loan-back scheme using a virtual currency — a reality that might not be too far away. Companies such as BTC Jam aim to connect lenders with borrowers globally using bitcoin as the currency.
BTC Jam, which bills itself as the world’s largest bitcoin peer-to-peer lending marketplace, also offers crowd-funding through this system, which opens the door to myriad possibilities for placement or layering of criminal funds. Swarm Crowdfunding can be used to launder money in several ways. For instance, an issuer might collude with investors to exchange money for securities in a criminal enterprise in the name of a business transaction. Swarm, a crowdfunding startup, is similar to mainstream crowdfunding sites like Kickstarter or Indiegogo, but it uses bitcoin as its currency. It’s an innovative concept, but fraudsters could potentially abuse it for money laundering and other criminal activities. The highly innovative Circle allows customers to obtain bitcoins with a credit card. Coinbase, a competitor, provides a similar concept.