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Chainalysis: Crypto Money Laundering Collapses
The reduction in cryptocurrency activity last year contributed to a corresponding drop in crypto money laundering.
This is according to a recent report on cryptocurrency crime from a company specializing in blockchain data. String analysiswhich showed that the illicit addresses sent Worth $22.2 billion of cryptocurrency to services in 2023, a sharp drop from the $31.5 billion sent in 2022.
“Some of this decline can be attributed to an overall decrease in the volume of crypto transactions, both legitimate and illicit,” the report said. “However, the decline in money laundering activity was more pronounced, at 29.5%, compared to the 14.9% decline in total transaction volume.”
The report also states that money laundering tactics are evolving, with more sophisticated crypto criminals using bridges and mixers.
It is possible, according to Chainalysis, that crypto criminals are diversifying their money laundering activity across more nested services or deposit addresses to better hide it from law enforcement and exchange compliance groups.
“Spreading activity across multiple addresses may also be a strategy to reduce the impact of a deposit address being frozen due to suspicious activity,” the report said.
“Therefore, combating cryptocrime by targeting money laundering infrastructure may require greater diligence and understanding of the interconnectedness through on-chain activity than in the past, as the activity is more diffuse.”
Last year, crypto and FinTech companies receive $5.8 billion in fines Due to lax financial controls, this is the first time that sanctions against these groups have exceeded those against traditional financial companies.
The fines were for things like failing to comply with driving regulations appropriate anti-money laundering measures or customer checks, as well as other financial crime issues. At the same time, traditional financial services companies paid $835 million in fines in 2023, the lowest figure in a decade.
However, Dennis Kelleher, CEO of the regulatory advocacy group Better marketstold the Financial Times that the figures were an indicator of poor practices among cryptocurrency firms, not a signal that traditional banks had improved their behavior.
“The pervasive fraud and criminality in the high-profile cryptocurrency industry has forced regulators and prosecutors to divert resources,” he said, calling it an effort to “put an end to this egregious conduct and try to prevent it from escalating further.”
Earlier this month, Cybera, a provider of advanced reporting and prevention tools, integrated with Chainalysis to provide government agencies and compliance teams with insights to combat scams and prevent financial cybercrime.
“By integrating our AI-driven scam insights with Chainalysis blockchain data, we are raising the bar for scam detection and prevention,” Cybera CEO Nicola Staub said in the release. “Our joint efforts, focused on speed and accuracy, will provide government agencies and compliance teams with unparalleled insights.”