Extensively misused by criminals
Europol has raised the issue that organised crime groups involved in corruption is increasingly misusing online services. Some criminals use virtual currencies and alternative payment platforms to transfer funds to their accomplices in the public and private sector.
The good, the bad and the ugly
The development of the financial landscape has not only given us new opportunities, but also quite a few challenges
Criminal misuse of virtual currencies has been identified in cases of for example:
- Drug traffickling
- Drug smuggling
- Terrorist financing
- Sanction violations (Iran and Russia)
- Human trafficking
- Arms trafficking
Could a financial institution detect criminal misuse of virtual currencies?
Yes, but it is not very easy
Eventually, virtual currencies must be exchanged into local FIAT currencies in order to enable purchases of houses, cars and other necessities. Generally speaking, it is only at this exchange stage that a financial institution could potentially detect that something is going on.
What should one look out for?
The trends are constantly evolving, but at the time of this report the following two exchange methods are being frequently used
- Two private individuals, of which one has FIAT currency (the exchanger) and the other has virtual currency
- When the virtual currency has been transferred to the exchanger's virtual currency wallet, the exchanger sends FIAT currency to the other person's bank account, mobile payment platform or prepaid card.
Alternative digital banking platforms
- Payment platforms with specific product offerings, where virtual currencies can be converted to FIAT currencies.
- You can for example fund an account with such a platform through a private virtual currency wallet, credit/debit card, bank account or peer-to-peer transfers between users within the same platform.