Money Laundering and Cryptocurrencies

One of the main evils of society is, of course, crime. And like any citizen, criminals also have to cover their expenses, don't they? That is why the fruits of their criminal activities must be protected at all costs, but how do they do it? Well, that's what is known as “money laundering” (or money laundering).

Money laundering is a process by which cover up the origins of profits derived from illegal operations, making them appear as if they were born out of completely legal activities.

Now, what types of crimes are the most common in which money is laundered? Well, the most common are: terrorism, drug trafficking, organized crime, piracy, human trafficking, cybercrime, arms trafficking, among others.

In the same way, to better understand money laundering, we must know its three stages: Placement, Stratification And integration .

1. Placement (Placement)

Placement consists of all the fruits of these illegal operations being introduced into the financial system, whether through bank deposits, transfers, investments, etc.

2. Stratification (Layering)

Already with these gains within the financial system, we proceed to move them through various transactions, so that they are extremely complicated to trace, so that the authority cannot identify their origin. Some examples are: bank transfers, purchase of luxury goods (mansions, watches, cars), purchase of cryptocurrencies in Exchanges decentralized, etc.

3. Integration (Integration)

After so many movements, these funds are reintegrated into the economy, already appearing as coming from legal acts, such as: the sale of the goods that were purchased during the stratification phase, a network of shell companies, etc.

This is, broadly speaking, how money laundering works. The truth is that it is a super broad topic and much more complex than what was explained in previous lines, but to understand it you would need much more than this simple blog.

The Role of Cryptocurrencies

However, having mentioned cryptocurrencies, it is very important to highlight their relevance and the role they play today. As we already know, these virtual assets are, speaking of Mexico (although the same happens in many other countries), very poorly regulated, so finding a way to use so many loopholes to their advantage has been the task of criminals for a long time.

To reiterate, as they are so poorly regulated, it turns out that criminals are starting to use cryptocurrencies as a means of payment, in such a way that in the end they make profits and are extremely difficult to track.

A clear example is the following: Let's imagine that one day you open an email that supposedly belongs to your grandmother, but in reality it is an email that when opened installs a virus on your computer, a “ransomware”, a virus that hijacks all the data you have stored on your computer and even in the cloud, the only way to free them is to pay the Hacker “X” amount of cryptocurrency.

The same thing happens in the “deep web” (deep web), where criminals are paid in Crypto to do their jobs, and you can imagine what kind of work I'm talking about.

It is urgent that authorities, both national and international, regulate everything related to cryptocurrencies and Blockchain, so that there's no possible way for criminals to get away with it.