SWIFT Research Report: Fiat Currency Still Criminals' Preferred Money Laundering Channel Over Cryptocurrency

According to a research report by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the role of cryptocurrencies in money laundering activities is exaggerated, with fiat currencies still being the most commonly used tool in such illegal activities.

Most Money Laundering Still in Fiat

Money laundering has always been a major concern in the global financial sector. According to data released by the United Nations, an estimated $80 million to $2 trillion of funds involved in illicit activities such as money laundering each year, a substantial amount. Cryptocurrencies, often associated with money laundering and other illegal activities, account for how much of this total? According to the latest research report by the Society for Worldwide Interbank Financial Telecommunication (SWIFT):

"Compared to funds laundered through traditional means, the use of cryptocurrencies for money laundering cases remains relatively low."

SWIFT is an international banking non-profit cooperative organization that provides messaging services for banks and other financial institutions, facilitating over billions of dollars in cross-border transactions globally every day. SWIFT stated in the report that the majority of money laundering activities still involve the use of money mules, hawala, front companies, cash, and drugs. In comparison, the use of cryptocurrencies is minimal, and even the use of digital currencies in cybercrime is rare. However, some criminals still utilize cryptocurrencies in illegal activities.

SWIFT highlighted the infamous North Korean hacking group Lazarus Group in the report, allegedly composed of North Korean hackers who convert funds stolen from other countries into cryptocurrencies and transfer them back to North Korea. Other cases involve hacker groups from Europe who use stolen funds to purchase pre-paid cryptocurrency debit cards, which can be used to store cryptocurrencies and automatically convert them to fiat currency during transactions.

Challenges with Cryptocurrencies Persist

Despite the current low percentage of cryptocurrencies being used as a tool for money laundering, SWIFT estimates that there will be an increase in cases of using cryptocurrencies for illicit activities in the future. SWIFT attributes this to the growing number of altcoins being introduced, many of which emphasize providing complete transaction anonymity. Additionally, the emergence of services like mixers and tumblers poses a significant threat to the financial environment.

SWIFT also noted a recent trend where e-commerce platforms are being used as a money laundering channel. These platforms only require an email for registration, allowing wrongdoers to convert illegally obtained cryptocurrencies into real-world assets such as real estate and watches.

However, SWIFT emphasizes that, at present, fiat currencies remain the primary tool for money laundering.