Bitcoin is “perfect money laundering for the 21st century” says IEEE’s Dr Kevin Curran

Cryptocurrencies are the perfect platform for “money laundering for the 21st century” says Dr Kevin Curran from IEEE

Only a brave soul would bet on physical cash still being around at the end of the century. Cryptocurrencies such as bitcoin have enabled us to enjoy a completely frictionless spending experience. But there is a dark side. Cybercriminals are taking advantage of the anonymity these currencies offer to further their illegal activities, often on the dark web.

The stiff process of old school money transfers offers government and financial firms a measure of control. The endless checks and balances create a trail that law enforcement can easily use to track financiers of terrorism and other criminal activity. It also makes it easy for a government to spot tax evasion. Not so with cryptocurrencies.

With bitcoin, personal details are never tied to the transactions, making the source of revenue as hard to trace as that of a roadside car window cleaner. Since it’s virtually impossible for the government to verify the income of an individual, it has become seamless for terrorist organisations and criminals to transfer money without fear of repercussions, making it the currency of choice for ransomware attacks, estimated by the FBI to be a $1bn industry.

Tumbling and Mixing

The rise of digital currencies has also led to an increase in the number of illegal marketplaces on the dark web. Drug dealers, hackers and worse are able to trade products and services freely, and law abiding citizens are unknowingly supporting this criminal activity. The ‘tumbling and mixing’ of digital currencies from large amounts into smaller transactions then makes it harder to trace the source of a digital coin.

“The money can be coming out in countries and in different time zones, through micro-transactions,” says Dr Kevin Curran, senior member at IEEE and professor at Ulster University. “It really is perfect money laundering for the 21st century”.

Blockchain technology could be a solution to the problem in the long run but given that flagship coin protocol Ethereum could soon be supported on one of the most popular darknet markets AlphaBay, it seems like the criminals are intent on staying ahead of the curve.

We recently caught up with Dr Curran to record a podcast, listen below:

Available on iTunes