To have a clear picture of the world’s worst money laundry schemes, new cybercrime frontiers, and organized crime, perhaps Latin America (LATAM) is the best specimen for you.
In the midst of a major economic downturn, Latin American countries are facing the worst money laundering schemes as a result of the increase in cryptocurrencies and unregulated P2P exchanges, according to a new report by threat intelligence firm Intsights and Ciphertrace.
According to the report, organized crime groups and drug cartels in LATAM countries use cryptocurrencies such as bitcoin; to cover up their tracks or fund their evil schemes.
The study has deepened into the crime scene in Latin American nations, exposing the challenges faced by law enforcement to curb the threat.
In particular, one way for criminals in LATAM nations to use digital currencies is through ‘ mixing services ‘ to confuse tainted digital currencies with others. Once criminals clean crypto through mixing, they trade in different exchanges and earn further income.
As part of money laundering schemes, criminal groups and cartels are taking advantage of inadequate KYC and AML standards by local exchanges and global P2P networks such as LocalBitcoin.
In fact, the report argues that a massive amount of illicit digital currencies around the globe ends up in LATAM cryptocurrency exchanges. Researchers at Intsights have found that exchanges in the Latin part of the world are usually denoted by indulgent regulations.
The report relates to the big money laundry case involving the payment processing firm Crypto Capital. The Panama-based crypto company was involved in a money laundry case worth up to $350 million.
Panama-Based Crypto Capital Money Laundry Saga
According to reports, Ivan Manuel Molina Lee, President of Crypto Capital, was detained by the law enforcement authorities on the grounds that he was directly involved in the scheme.
Crypto Capital has been able to mislead one of the biggest exchanges in the world, Bitfinex. Colombian drug cartels used cryptocurrencies to launder at least $350 million.
Additionally, criminals in Latin America take advantage of the leniency of P2P platforms; such as LocalBitcoin and Paxful to compound their interests. As per the report, this is the most preferred way for LATAM criminals.
The LocalBitcoin P2P platform has the highest trading volumes in Latin America. This is mainly due to the lack of or minimal regulations such as lack of AML and little KYC requirements. The report reads:
“Threat finance is evolving in Latin America as organized crime groups turn to cryptocurrency to launder large amounts of money and dive into the dark web to find hackers for hire…criminals are taking advantage of unregulated exchanges that do not require registration information and proof of identification for tracking purposes. These illegal exchanges are appealing to criminal groups that are looking to move large amounts of money through untracked channels.”
At Least 70% of the LATAM Population is Online
Furthermore, the report notes that 69 percent of the Latin American population is online, a significant percentage. Majority of Internet users come from Colombia and Brazil. The rapid digitization capped by political and economic precariousness; has resulted in increased hacking, fraud, money laundry, drug cartels and other crimes in the region.
In Conclusion, this massive hornet’s nest is unlikely to be resolved soon anytime; due to the lack of anti-money laundry legislation in place and the poor state of law enforcement at LATAM.
However, the report suggests that firms or agencies willing to thwart the problem; should “collect, monitor, and analyze cybercrime intelligence,” to learn and adopt the best security protocols.
Disclaimer note: This article is based on the writer’s opinions/research and does not necessarily represent the views and opinions of TWJ.