top of page
Search

Cryptocurrency is the primary method of money laundering according to Austrac

According to the Australian Transaction Reports and Analysis Centre (Austrac), organized crime groups are increasingly using cryptocurrencies as "standard part of the money-laundering tool kit".

The financial intelligence service also revealed how Russian paramilitary organizations are requesting bitcoin donations to fund the purchase of weapons for use in the Ukraine war.


John Moss, the deputy chief executive and head of intelligence, claimed that cryptocurrency was no longer a "niche option" for criminal activity but rather the mainstream money laundering route.


He noted that more conventional money laundering is now being replaced by cryptocurrencies, particularly when sending money abroad.

Moss explained how Russian organizations have been requesting donations in digital currency on social media to fund the purchase of weapons, drones, and armor for the fight in Ukraine.


Global consultancy Chainalysis calculated in July that almost $2.2 million in cryptocurrencies had been transferred to Russian paramilitary organizations, who had shared pictures of newly acquired weapons online.


"This shows how easy it is to use crypto as a fundraising source and when you mix it with social media, you get a big reach. You’ve got a technology that’s easy to use and if you’re flexible in the type of cryptos you take, you can do quite well out of it ," according to Moss.


Moss also expressed concern over the fact that an increasing number of regulated crypto-ATMs are being used by criminals.


"These machines are not seen in places like the UK. When you look at the reporting, you see lots of fraud victims. Very vulnerable people putting large amounts of cash into these ATMs, which is essentially immediately gone offshore ," according to Moss.


There are 10 crypto-ATMs operated by digital currency exchanges in Australia, while the number of machines is increasing swiftly.


Although "it is not large scale," this type of crypto-fundraising does occur in Australia, according to Michael Tink, chief of intelligence operations at Austrac.


"We have seen evidence of Australians sending money to offshore cryptocurrency accounts linked to Al-Qaida, linked to ISIL, and this is largely organisational support for travel, training, the salaries of fighters and uniforms," Tink said.


"It doesn’t take a lot of money to have an impact on a terrorist organisation in a conflict zone and small amounts of money can buy weapons and result in attacks, so it’s still a significant risk."


Due to worries about background checks, Britain's Financial Conduct Authority (FCA) last year ordered the closure of all bitcoin ATMs.


"One of the key vulnerabilities for a crime group laundering money is the placement stage of the money-laundering cycle, so that’s trying to get cash into crypto currency. [These ATMs] are good way to do that ," Tink remarked.


"There is a perception that if you are putting money through a hole in the wall, or a box in a shopping centre, that it will be more anonymous."


AML/CFT regulations for crypto exchange companies are in place in Australia, according to Tink, however she admitted that this is not the situation everywhere.


"If you look at parts of eastern Europe, it’s not difficult to cash out crypto-currencies there and fly under the radar," said Tink.


"The biggest risk for crooks is at the Australian end and that placement stage of the money-laundering cycle."


In Australia, Tink referred to cryptocurrency exchanges as "the first line of defence" against money laundering and complimented the sector's reporting of suspicious matter.

By fLEXI tEAM