Traditional Money Launderers Utilizing Crypto Networks for On-Chain Money Transfers, Says Chainalysis

The world of crypto money-laundering is evolving, with traditional money launderers now utilizing crypto networks to clean cash that originated outside of the digital currency realm. According to a new report from analytics company Chainalysis, these criminals are creating “large-scale money laundering infrastructure” on-chain, raising concerns among experts.

While Chainalysis is known for flagging illicit transactions such as scams, thefts, and ransomware attacks on the blockchain, this new trend involves transfers from wallets that aren’t known to be illicit. These transactions exhibit characteristics that would typically raise red flags in traditional financial compliance departments, such as splitting funds into smaller tranches just below reporting thresholds and recombining them later.

Chainalysis’ Head of Research, Kim Grauer, emphasized that while transactions just below certain thresholds may not definitively be illicit, they warrant further investigation. The report found a significant number of transactions valued just below the $10,000 mark, where additional know-your-customer rules apply, indicating a potential trend in the space.

One concerning aspect highlighted in the report is the flow of funds to over-the-counter brokers who openly advertise their willingness to convert criminal crypto into dollars without asking questions. Grauer stressed the importance of advancing compliance techniques in the crypto industry to align with those developed in traditional banking.

As the world of crypto money-laundering continues to evolve, experts are calling for increased vigilance and collaboration between industry players to combat illicit activities on-chain.