Industry News Bitcoin, Money Laundering and Big Banks

Bitcoin, Money Laundering and Big Banks

September 29, 2020

FinCEN files represent a detailed and in-depth report on the dealing of the major banks. These are banking businesses that are active across the world and which represent household names with ordinary users as much as for other businesses. Now, a report in the form of a series of documents is showing how they are moving trillions of USD in shady transactions. These funds belong to a range of clients, but among them are suspected terrorists, dictators, and even global drug kingpins.

The report also shows how big nations, including the US, regularly see their governments fail to put a stop to these practices. The Financial Crimes Enforcement Network is the name of the US government agency, operating under the Treasury Department. It is tasked with combating terrorist financing, money laundering, and other financial types of crimes. It produced the same collection of reports related to suspicious activity.

These offer an uncomfortable glimpse into the world where governments are either unwilling or unable to stop things like financial corruption at the highest banking level. The cash flows of savings stolen from Ponzi schemes, drug war profits, and embezzled funds from developing nations are just some of the activities that the reports mention. Expectedly, the same pathways now also utilize cryptocurrencies, especially bitcoin, in an effort to dilute any trace or trail of these dealings. This process is terrifying to anyone who is seeking justice, but also very insightful about the connections between these very traditional financial institutions and a very novel digital currency.

Process of Money Laundering

Money laundering is not just a simple financial crime. Instead, it is a tool that allows many, if not all other crimes to take place. These cover practically any major criminal venture in the world, no matter if it is drug trafficking or serious political machinations. Now it is clear more than ever that banks are the ones allowing this crime to take place. BuzzFeedNews managed to expose a range of famous banks that are tied to the same processes. These names include entities like HSBC, JPMorgan Chase, Deutsche Bank, and Standard Chartered.

All of them have been apparently a part of a global money-laundering system and its diverse regional operations. Presently, the financial system allows banks and their executives to avoid any serious prosecution for these crimes. Here, the essential element is that the bank needs to fill out a simple form of notifying FinCEN that they might be active in a criminal proceeding. Once they do, they are in the clear. Yet, they are not obliged to do anything about that suspicion and instead can continue with the same operation.

Massive Undertaking

An estimate from the United Nations shows just how massive these illegal money-laundering operations actually are. One report suspects that on a yearly basis between 2 and 5 percent of the planetary GBP is lost to money laundering. That puts the sum between 800 billion and 2 trillion USD and out of that, 90 percent of the actual money laundering goes undetected. With that much money in the picture, it is no surprise that the same schemes include the use of cryptocurrencies.

Another recent report suggests that around 1.1 percentage of all crypto transactions are illicit. Of course, there is a lot of hard history connected with that notion. In the early days of the cryptocurrency boom, things like the Silk Road, which was a notorious online dark marketplace, were widely connected to bitcoin. Now, thanks to the features and possibilities cryptocurrencies continue to offer, they too are a piece of the global money-laundering network.

Changing Times

It would be easier for the regulators and cryptocurrency naysayers to simply label all crypto and especially BTC tokens as tools for criminal activity. That is why their role in banking money-laundering schemes would also be a normal addition to this assortment of suspected crimes where crypto is involved. But, the truth remains very different, because there are over 42 million bitcoin wallets in the world. This number is constantly growing as more and more individuals and companies take part in the expanding crypto economy.

With this, the process of tracking cryptocurrency transactions is also becoming more and more transparent. A recent Twitter crypto scam, where many users sent their crypto funds to malicious accounts, was quickly tracked. While their owners are not known, the ability to oversee the pathways of crypto funds is light-years away from any such possibility in the traditional domain. Here, only court orders and other drastic formal documents allow any insight into the pathways of money. The FinCEN report shows that the national governments just like citizens of many countries would need to demand a lot more transparency in banking dealings, primarily because of the fact that the current system is sorely lacking.

Pressure on the Banks

There is little doubt that banks are involved in massive money laundering schemes and there is even less doubt that some of these include bitcoin in their procedures. After all, all the features that are offered inside of the cryptocurrency ecosystem are beyond useful for these kinds of financial procedures. This is why the use of bitcoin and other cryptocurrencies in money laundering is likely only going to become more and more prevalent. But, like in esports, social media, and other widely popular digital environments, nefarious activities are not the direct result of a particular platform.

If this logic would be applied to the traditional currencies, it could be possible to say that the USD is the reason why crime exists. After all, most of the global criminal ventures utilize this currency. Yet, cryptocurrency just like traditional currencies is only a tool that some use for malicious criminal reasons. The way out of that problem is not to destroy the tool but to regulate how that tool is being applied. More importantly, it is time to regulate the banks and everyone else who might reach out for that tool. Otherwise, the present system will simply add crypto to its array of tried and tested money laundering procedures.

Source: Forbes