How Criminals Are Using Bitcoins for Money Laundering – 2024 Guide

Cryptocurrencies have changed the world in many different ways. No one guarantees they are going to replace the traditional money in the future. However, it would be unfair to say they haven’t made the lives of people more comfortable.

Their influence on human society is more visible than ever before. People started to adapt to the newest trends. That is the reason why many of them decided to invest in Bitcoin, Litecoin, and other cryptos. On the other hand, businesses also had to change their way of functioning. The number of companies that are accepting crypto-based payments is growing every day. For instance, people can now even gamble in online casinos and make crypto deposits.

All digital currencies are special and unique in some way. However, it is not a secret that Bitcoin is the most popular one in the world. The value of one BTC jumped for only a few days, and many insights confirm the same trend will continue. Of course, some people still hesitate to invest their savings in Bitcoin. However, there is no reason to delay. Websites like explained pretty well why people should go for Bitcoin. We recommend you check their analysis after reading our article.

Yet, it would be unfair to say everything around Bitcoin is perfect. The majority of people want to ensure financial stability honestly. Because of that, they will analyze trends, research the news, and try to predict the best moment to sell or purchase Bitcoins. However, there is also a minority of people that are bigger supporters of criminal activities. They use Bitcoins for money laundering. That is the reason why we would like to explain to you how criminals are using Bitcoins for money laundering. These people are not using only one method, and, thanks to our list, you may manage to recognize criminal activities easier. Let’s find out those methods together!

Method 1: Hiding

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You have probably heard about blockchain. It is a technology that supports Bitcoin transactions and makes them safe. Yet, do not forget the main advantage of bitcoin. People gladly use Bitcoin because it ensures anonymity. Criminals use those anonymizing services to hide the funds’ sources of their dirty money.

As you know, the purpose of Bitcoin anonymity is a bit different than that. The creators of the most popular digital currency only wanted to ensure the protection of the private data of all of us. However, it is also an excellent benefit for criminals that want to participate in illegal money laundry activities.

Method 2: Placement

There are two different ways of how people can purchase Bitcoins. One way to do that is by investing traditional money. On the other hand, you can do that by using other digital currencies as well. It is not a secret that crypto exchanges established different types of regulations that control all financial transactions.

However, there is something we have to highlight here. Of course, all legit exchanges are following the regulatory requirement. All of them that are compliant with AML will follow standards for identity verification as well as fund sourcing. Unfortunately, not all of them are AML compliant. That is the opportunity that criminals use for money laundering. The identity of the parties remain anonymous, and tracing the source of funds they invested is impossible in those cases.

Method 3: Tumblers

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Have you ever heard about tumblers? It is a mix of services that allow dishonest people to participate in money laundering activities. The tumblers themselves send the money through different addresses. After they do that, they recombine the BTCs. Because of that, the money criminals invested becomes clean. Logically, they also have to pay a certain fee for the service of that type. They are usually not cheap, but criminals do not hesitate to invest their money because that is the only option to make dirty money clean.

Let’s describe the most common method that criminals use with tumblers. Before everything, all the digital currencies start in a legit crypto wallet on the clarinet. After that, the criminals transfer them to a dark web wallet. They make the multiple hops before they transfer it to another dark web wallet. In that case, the money they invested becomes clean enough, and they decide to bring it back to the clarinet. They can trade it in the legit crypto exchange in that way or simply sell it to another investor for the traditional money. The process is complex, but we hope you understand it.

Method 4: Peer-to-Peer Networks

Peer-to-Peer networks are a great option for people that want to lower the risks of getting caught for Bitcoin money laundering. The reason why they are a perfect tool is decentralization. In most cases, the decentralized peer-to-peer networks are international. Because of that, criminals have the chance to use an unsuspecting third party to send all the funds from one destination to another.

The process of money laundering has the same goal as the previous two methods. The Bitcoins will find a legit funnel to reach the exchanges in countries that have almost no anti-money laundry laws. After that, the criminals can convert their BTC into the local currency of the country they targetted for accomplishing their goal. After they do that, they will purchase some luxurious vehicles or apartments.

Method 5: Gambling Sites

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We said at the beginning of this article that many online casinos accept crypto-based payments. There is a big chance the number of those casinos is going to grow in the future. However, these gambling sites can also be a great opportunity for criminals to complete the money laundering process.

When a casino is crypto-friendly, it allows people to purchase virtual chips with digital currencies. After criminals do that, they wait for a couple of days to withdraw the money they deposited. Of course, they are not going to withdraw all the money they have at once. Instead of that, they will make small transactions each day. In that way, everything they did will become legal.