Organized money laundering seems to be one of the “killer applications” of crypto. Money laundering has always been an issue for states and the regulated FIAT system. The scale of money laundering is difficult to assess. The United Nations Office on Drugs and Crime (UNODC) estimates that between 2 and 5% of global GDP is laundered each year. That’s between US$ 800 billion and 2 trillion each year. The dawn of cryptocurrencies provided criminal organizations a new means for their laundering purposes.
Two weeks ago, Operation Tulipan Blanca (White Tulip), coordinated by Europol and conducted by the Spanish Guardia Civil with the support of the Finnish authorities and Homeland Security Investigation of US, resulted in the arrest of 11 suspects for laundering more than EUR 8 million via cryptocurrencies, according to a Europol press release. The Europol investigation was centered around a crime ring which launders money from narcotics sales using credit cards and cryptocurrencies.
Spanish money launderers picked up illicit proceeds in cash from drug traffickers, which were then split into small quantities to be deposited into hundreds of third bank accounts – a criminal method known as smurfing. Since the cash was already circulating in the financial system, the ring just needed to transfer the illicit funds back to the drug dealers in Colombia. The criminals then acquired credit cards linked with the accounts and traveled to Colombia where they made withdrawals.
Once the criminals realized that cash withdrawals and bank operations were easy to track, they used cryptocurrencies instead, mainly Bitcoin. The suspects converted illicit funds to Bitcoin through an exchange, which they then changed to Colombian pesos and deposited into Colombian bank accounts.
137 individuals are still being investigated by the Guardia Civil. The suspects deposited over EUR 8 million into 174 different bank accounts. Europol says it has organized special training “to assist law enforcement officers in identifying the use of cryptocurrencies by organized crime networks.”