Discover the crypto universe in depth

Cryptocurrencies vs Cash: The Battle Against Money Laundering

Despite the increasing adoption of cryptocurrencies, cash is still the preferred tool for money launderers, according to the U.S. Department of the Treasury.

Nevertheless, the Treasury acknowledges that digital assets pose a growing threat in terms of money laundering and terrorist financing.

Fraud, particularly through investment scams and health-related fraud, remains the primary driver of money laundering activity.

As part of its national risk assessment for 2024, the U.S. Treasury reported that traditional currencies continue to dominate money laundering activities. At the same time, it has been observed that despite the evolution of financial means, terrorist networks and other malicious actors still rely on established financial systems, including banks and money transfer services, to carry out their illicit operations.

However, the use of digital assets by illicit actors to launder money and finance their operations is increasing.

Fraud, Terrorism, and Technological Exploitation

Fraud continues to be the main driver of money laundering activity, with a significant increase in fraud types involving the use of technologies, such as telemedicine and virtual asset investment scams.

In line with the 2022 risk assessment, the most common financial connections between individuals in the United States and foreign terrorist groups involve individuals directly soliciting funds for foreign terrorist groups or attempting to send funds to them using cash, registered money transfer companies, or, in some cases, virtual assets.

The 2024 terrorism financing risk assessment revealed that groups such as ISIS and Hamas are increasingly using virtual assets for financing. This trend is of growing concern to legislators, who discussed the role of cryptocurrencies in illicit financing at a hearing in November, highlighting the importance of protecting privacy concerns and the transparent nature of the blockchain.

Treasury’s Strategy Against Illicit Financing

The Treasury is preparing to publish its annual strategy to combat illicit financing, including recommendations for addressing the highlighted issues. This approach aims to strengthen efforts to counter the use of digital assets in illicit activities while preserving the benefits of blockchain technology.

Related Posts