Fiat, a government-issued currency, is still the best choice of financial criminals.
Concerns have always centered on the possibility of crypto assets being used for nefarious reasons, but the US Treasury Department just released something that allays those concerns.
Despite widespread fears that cryptocurrency could be used for criminal purposes, a newly published report from the US Treasury Department indicates that the majority of financial crimes are still committed with fiat money.
The US Treasury Department released a three-year report on money laundering, proliferation financing and terrorist financing early this month. And they were all based on digital assets.
And crypto opponents may think it all has to do with digital assets widely used in these sectors.
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It’s Fiat, not Crypto
Nevertheless, fiat currencies and traditional money are still more commonly used in these circumstances, making them more likely to come into play.
The Treasury’s findings include a detailed discussion of virtual currencies, stating that both their user base and market capitalization have increased dramatically since the previous risk assessment in 2020.
However, these reports revealed that criminal flows through fiat currency and established networks continue to outnumber those involving cryptocurrency.
Total Market Cap of Crypto at $1,805 Trillion on the Daily Chart | Source: TradingView.com
The US Treasury Department released the following:
“The use of crypto assets for money laundering is still significantly less common than the use of fiat money and other more traditional means.”
Crypto still a good choice for crime
According to the National Money Laundering Risk Assessment, “virtual assets” are an ever-evolving domain within the growing arsenal of money launderers to hide their finances.
It identified DeFi and “anonymity-enhancing technology” as possible culprits.
During the pandemic, virtual assets have apparently been widely used in phishing attacks and ransomware scams.
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Shady operators can use profit promises from the unpredictable cryptocurrency market to trick victims into revealing personal information or infecting their devices with viruses.
The attackers can then demand payment in crypto after the attack, which is both pseudonymous and irreversible.
In a recent Chainalysis Crypto Crime Report, many criminals use over-the-counter brokers to launder their cryptocurrencies.
OTC brokers are individuals or companies that assist transactions between buyers and sellers who do not want (or cannot) do business on a cryptocurrency exchange.
A staggering amount
Meanwhile, a United Nations report says money laundering costs the global economy between $800 billion and $2 trillion a year.
This corresponds to between 2% and 5% of gross domestic production. Today, almost 90% of money laundering goes undetected.
However, technological progress has led to the development of more effective tools. Criminals continue to use these claims to move dirty money.
At the same time, government agencies and fintech companies are using technology to identify transaction characteristics and expose fraud.
Featured image from India Today, chart from TradingView.com