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US Treasury Department has stated that despite the widespread use of digital assets for money laundering, the rate is still higher with fiat currencies. The statement is contained in the Treasury Department’s three-yearly reports that cover proliferation financing, terrorist financing, and money laundering.
Although the Department pointed out the risks each of these areas pose, they also noted that traditional networks and fiat currencies are more commonly used in fraud and illicit finance compared to crypto.
Digital Assets Are Evolving For Money Launderers
According to the National Money Laundering Risk Assessment, “virtual assets” are presently evolving within money launderers’ growing toolkit. Many of the illicit acts are now using crypto assets to hide their funds and prevent any trace back to them. The assessment also named “anonymity enhancement technologies” and DeFi as potential culprits.
The report revealed that digital assets have played a very important role in both ransomware scams and phishing attacks during the pandemic.
Additionally, threat actors may use the promise of high returns from the volatile crypto market to lure their victims into revealing their personal information. And in some cases, they use different phishing methods to get them to clicks or open a malware-infested document. Once they succeed in stealing vital information, the threat actors may demand a ransom payment from the victim. These payments are now usually demanded in cryptocurrencies, where the funds are irreversible while the identities of the hackers remain hidden.
Crypto’s Use For Money Laundering Is Growing
The report admitted that the use of cryptocurrencies as a means of laundering money is increasing daily. And a similar report by Chainanalysis noted that criminal blockchain addresses received more money than ever in 2021.
Chainanalysis also reported that the share of illegal funds within the crypto space is at an all-time low, making up only 0.15% of all transactions. This is a drop from 0.62% in 2020, and 3.37% in 2019.
But the Treasury Department, in its assessment, noted that more people are still laundering money using fiat currencies compared to digital currencies. “The use of virtual assets for money laundering remains far below that of fiat currency and more traditional methods,” the report stated.
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