Category: Fiat

Fiat, a government-issued currency, is still the best choice of financial criminals.

Concerns have always centered on the possibility of crypto assets being used for nefarious reasons, however the US Treasury department just released something that dispels these anxieties.

Despite widespread fears that cryptocurrency could be used for criminal purposes, a newly published report by the US Treasury indicates that the bulk of financial crimes are still committed using fiat money.

The US Treasury presented a three-year report on money laundering, proliferation financing, and terrorist financing early this month. And they were all based on digital assets.

And crypto detractors may believe this is all about digital assets being widely employed in these sectors.

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It’s Fiat, Not Crypto

Nevertheless, fiat currencies and traditional money are still more often utilized in this circumstance, thus they are more likely to come into play.

The Treasury’s findings include a detailed discussion of virtual currencies, stating that both their user base and market capitalization have expanded dramatically since the previous risk assessment in 2020.

However, these reports found that criminal flows via fiat currency and established networks continue to outnumber those involving cryptocurrency.

Crypto total market cap at $1.805 trillion on the daily chart | Source: TradingView.com

The US Treasury disclosed the following:

“The use of crypto assets for money laundering continues to be significantly less prevalent than the use of fiat cash and other more traditional means.”

Crypto Still A Good Choice For Crime

According to the National Money Laundering Risk Assessment, “virtual assets” are an ever-evolving domain within money launderers’ expanding armory for concealing their finances.

It singled out DeFi and “anonymity augmenting technology” as possible perpetrators.

Throughout the pandemic, virtual assets have apparently been used extensively in phishing assaults and ransomware scams.

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Shady operators may use pledges of profit from the unpredictable cryptocurrency market to entice victims into disclosing personal information or infecting their devices with viruses.

The attackers may then demand payment in crypto following the attack, which is both pseudonymous and irreversible.

In a recent Chainalysis Crypto Crime Report, many criminals use over-the-counter brokers to launder their cryptocurrencies.

OTC brokers are individuals or businesses that assist transactions between buyers and sellers who do not wish to (or are unable to) conduct business on a cryptocurrency exchange.

A Staggering Amount

Meanwhile, a United Nations report says that money laundering costs the global economy between $800 billion and $2 trillion per year.

This equates to between 2% and 5% of gross domestic output. Today, almost 90% of money laundering remains undetected.

However, technological advancements have led in the development of more effective tools. Criminals continue to use these advancements to move dirty money.

Simultaneously, government agencies and fintech firms utilize technology to identify transaction characteristics and assist in exposing fraud.

Featured image from India Today, chart from TradingView.com