The Bitcoin Virtual Currency: A Safe Haven for Money Launderers?

Ogunbadewa, Ajibola

doi:10.2139/ssrn.2402632

Cited by 3 publications

(5 citation statements)

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“…The study of ML is an emerging field, and literature on the role of cryptocurrency in ML is scarce. Scholarship generally falls into one of two categories: policy and regulation (Albrecht et al., 2019; Mancini, 2016; Neagu, 2019; Turpin, 2014); or investigation and policing (Ogunbadewa, 2014; Custers et al. , 2020; Farrugia et al.…”

Section: Illicit International Political Economy and The Theorization...mentioning

confidence: 99%

“…This would discourage them being leveraged for criminal purposes while also ensuring that crypto-ML will be adequately regulated and investigated. On the other hand, Ogunbadewa (2014) suggests that investigators be equipped with the right technology and techniques to police cyberspace. He argues that the illicit use of cryptocurrency can be circumvented if governments invest in high-tech online surveillance programs as well as multilateral platforms to facilitate international cooperation in investigating the illicit use of cryptocurrency.…”

Section: Illicit International Political Economy and The Theorization...mentioning

confidence: 99%

“…(1) policy and regulation (Albrecht et al., 2019;Mancini, 2016;Neagu, 2019;Turpin, 2014); or (2) investigation and policing (Ogunbadewa, 2014;Custers et al., 2020;Farrugia et al., 2020).…”

Section: Debatesmentioning

confidence: 99%

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Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency

Leuprecht

Jenkins

Hamilton

2022

JFC

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Purpose This study aims to explain how cryptocurrency is leveraged for illicit purposes across the global financial system. Specifically, it establishes how cryptocurrency has been changing the nature of transnational and domestic money laundering (ML). It then assesses the effectiveness of conventional anti-money laundering (AML) policy and legislation against the proliferation of crypto laundering, using Canada as a critical case study. Design/methodology/approach Data was collected from court cases and secondary sources to build cross-case trends of cryptocurrency use in ML. Illicit International Political Economy forms the theoretical foundation for this study, whose contribution is situated in the current literature on crypto-ML. Findings This study finds that Bitcoin is common among crypto-money launderers, though most also use some form of alt-coin, and that the use of third-party currency exchanges is a prevalent method to create illicit funds and conceal proceeds of crime. The findings validate two hypotheses that illicit use of crypto is prevalent in the first two stages of ML, and that crypto is most often used in conjunction with other fiat currencies. Although law enforcement is improving on monitoring and understanding popular cryptocurrencies such as Bitcoin, alt-coins pose a significant challenge for criminal intelligence. New regulations for third-party currency exchanges are having a positive impact on curtailing crypto-laundering but are shown to be insufficient per se to contain the use of crypto in criminal activity. Originality/value This study contributes to a more robust understanding of the use of virtual currency in transnational and domestic ML. It contributes to an emerging body of literature on the role of technological change in enabling the global flow of illicit funds. It also informs public policy on virtual currency in general, and on AML regulation in Canada in particular.

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Section: Illicit International Political Economy and The Theorization...mentioning

confidence: 99%

Section: Illicit International Political Economy and The Theorization...mentioning

confidence: 99%

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Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency

Leuprecht

Jenkins

Hamilton

2022

JFC

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“…At its peak, E-gold was only second to PayPal in the online payment industry, transacting between USD 1.5 and 2 billion in sellers of child pornography to accept payment, operators of investment scams, and carders to transfer the proceeds of their crime, since it circumvented currency controls, US federal authorities targeted E-gold for not adhering to licensing standards (Mullan 2016;White 2014;Trautman 2014). (Notably, E-gold, in contrast to other internet payment systems, did not include a statement in its terms and conditions that prohibited its use for criminal activity (Ogunbadewa 2014).) The resulting court case found against E-gold's operators, though it viewed their actions as unintentionally criminal; tens of millions of dollars were held, unable to be released to account holders, when trading was frozen (White 2014).…”

Section: Unsanctioned Alternative Payment Systemsmentioning

confidence: 99%

“…Fiat currency may be spent in a variety of forms, such as buying digital assets (Elliptic 2019), gambling (Brooks 2012;Fiedler 2013;Gainsbury and Blaszczynski 2017), purchasing luxury goods (Custers, Pool, and Cornelisse 2018), or buying airline tickets (Hutchings 2018). Additionally, other ways to cash out stolen fiat currency include direct purchases of every-day goods and services that the purchaser benefits from (Ogunbadewa 2013;Custers, Pool, and Cornelisse 2018), such as airline/hotel points (SecureWorks 2016), PayPal payments (Hutchings and Pastrana 2019), gift cards, or gifts directed to another account on platforms, such as the now defunct money transferring platform Tendr or the fundraising platform PayItSquare, that may be a front for the scammer (Flashpoint 2016). Some cashout services are also advertised in illicit marketplaces, with a variety of solutions offered, including "guides, to actionable solutions, like PayPal or bank account access" (Van Wegberg, Oerlemans, and van Deventer 2018).…”

Section: Cashing Outmentioning

confidence: 99%

Evaluating Criminal Transactional Methods in Cyberspace as Understood in an International Context

et al. 2021

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McMurdie 2016), due to the quickly-evolving and vast nature of these crimes (Holt 2018), which typically involve more effort and cross-border expense and access difficulties than do most offline crimes in the Pursue mode. Policing has been slow to adjust to the rise of digital crimes and fraud, not least because it often means giving up functions currently performed, which meet resistance (HMICFRS 2019a(HMICFRS , 2019b."Effectiveness" in policing cybercrime needs to be clearly defined and should be seen on a spectrum. The evolution of cybercrime and cyber offender strategies is fast paced, making studying and reporting on them a difficult task. In addition to this challenge, the vast majority of research is undertaken, produced, and disseminated in English and focuses on a minority of sites where actively publishing western academics are based (Cross 2018).Yet, the scope of cyber offenders, their involvement in a range of illegal activities, and the costs of policing cyber offenders, stemming from cross-jurisdictional offences, generate serious concerns for law enforcement agencies throughout the world (Carroll and Windle 2018; Gilmour 2014; Malby et al. 2013). However, little is known about the attitudes of law enforcement towards cyber offenders in those countries in which statesponsored and state-tolerated cyber offending occurs: it is simply assumed or inferred from unsuccessful pursuit that little is being done there, at least until they victimise their local populations, setting aside often well-informed and severe reactions to those deemed to be "political opponents" or acting without authorisation from those in power. Cyber offenders operate broadly across borders, creating mutual legal assistance problems, which arise from variation in legal definitions provided by different statutes (Harkin, Whelan, and Chang 2018; McMurdie 2016) as well as institutional problems of conflicting priorities even where the offenders are not statesponsored or state-tolerated/corruptors. Except where political pressure or comity can be applied from abroad, enforcement agencies generally prioritise their domestic cases over international ones. As a result, cyber offenders encounter police services that differ in their approaches for detecting, investigating, and disrupting incidents associated with cyber offenders and their collaborators/competitors. These discrepancies, in turn, lead to uncertainties about the use of disruption strategies and their effectiveness, particularly in cross-border contexts, in addition to any uncertainties for evaluations arising from uneven but generally poor data availability.With limited resources and expertise, especially in opportunity principle countries where discretion is formally allowed, 1 law enforcement must make explicit or implicit strategic decisions in its approach, focusing on what it believes will yield the largest impacts while working within the political and economic constraints of its local CrimRxiv Evaluating Criminal Transactional Methods in Cyberspace as Understood in...

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Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoins

2013

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Bitcoin is a major virtual currency. Using weekly data over the 2010-2013 period, we analyze a Bitcoin investment from the standpoint of a U.S. investor with a diversified portfolio including both traditional assets (worldwide stocks, bonds, hard currencies) and alternative investments (commodities, hedge funds, real estate). Over the period under consideration, Bitcoin investment had highly distinctive features, including exceptionally high average return and volatility. Its correlation with other assets was remarkably low. Spanning tests confirm that Bitcoin investment offers significant diversification benefits. We show that the inclusion of even a small proportion of Bitcoins may dramatically improve the risk-return trade-off of well-diversified portfolios. Results should however be taken with caution as the data may reflect early-stage behavior which may not last in the medium or long run.

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The Bitcoin Virtual Currency: A Safe Haven for Money Launderers?

Cited by 3 publications

References 0 publications

Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency

Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency

Evaluating Criminal Transactional Methods in Cyberspace as Understood in an International Context

Virtual Currency, Tangible Return: Portfolio Diversification with Bitcoins

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