ATMs And Online Gambling Houses, The Haven Of Cryptocurrency Laundering


The digitization affects the whole of society, including organized crime. Arms, drug and human traffickers have found in cryptocurrencies the perfect currency to launder millions and millions of black money. Cybercriminals known for years the virtues of Internet when collecting payment from an attack by ransomware or any other criminal activity. It is their natural habitat. They are used to getting around without raising excessive suspicions, especially when browsing the dark web and deepweb —networks overlying the public Internet that require specific software and configurations or authorization to access. If there is a weak link in the system, hidden from the eyes of almost any mortal, mafias and everything that sounds criminal will sneak in there.

Pallets full of bundles of 500 euro bills, purchases of real estate or works of art are more typical images of bad guys from the last century. Cryptocurrency ATMs, especially bitcoin, don’t. The operation is really simple . It is enough to go to these financial providers, in Spain they are around thirty, enter a certain amount in a physical currency and the machine delivers a QR code associated with another 32-digit alphanumeric code equivalent to the amount of the cryptocurrency. “They are a perfect washing machine. Unless the owner of the ATM adopts some type of self-regulation, he only has to check if the person who puts the euros in is a resident ”, explains Luis Rodríguez, expert in financial crime prevention and CEO of ComplianZen.

The pitufeo is the usual technique for bleaching in these establishments. It consists of switching relatively small amounts to crypto repeatedly, for months. It may well be the criminals themselves or people hired by them with the promise of receiving a percentage of the transaction. “As you get the QR code, the money trail is lost,” says Rodríguez. This does not mean that they always get away with it. In May of last year, the Central Operational Unit (UCO) of the Civil Guard detained eight members of a gang in Madrid that had laundered nine million euros from drug trafficking using cryptocurrency ATMs.

Exchange houses and companies specializing in tracking these assets represent a containment dam against organized crime. Chainalisys, Elliptic and Binance collaborate with authorities. The latter, for example, allowed last month to dismantle a cyber-extortion network in Ukraine that had laundered more than 35 million euros from ransomware ransom payments.

“The great use case for cryptocurrencies is due to the speculation that surrounds them, not to money laundering as such. Laundering makes sense because there is so much speculation that illegal money can take refuge, ”says Alex Preukschat, coordinator of Blockchain Spain and the Alianza Blockchain Iberoamérica.

Online gambling houses have also become one of the epicenters of black money. The mafias set up the company directly or acquire the corresponding casino license from a third party – and always in the name of a figurehead who makes it difficult to blame them. A very attractive cover due to the ease of moving currencies, as well as the rise of a poorly regulated sector in certain countries.

Once operational, the wash begins. They usually use the following mechanisms: injecting money into the online gambling house from territories where these movements are not controlled, hiring people who gamble with prepaid credit cards or putting bots that appear to play as if they were anonymous users. Once the bets are finished, all the money moved, be it cryptocurrencies or euros, is already legal tender. “The cash, little by little, goes to less; and more now with the pandemic. The problem is that crypto is filling up with criminals. As long as it is not seriously and ambitiously regulated, it will continue to be a vehicle for the bad guys to enjoy ”, ditch Rodríguez.

There is no need to resort to the deep web, smurfing or front companies when the lack of legislation is itself a sink for cryptocurrency laundering. Transfers do not respond to currency regulations. Knowing who includes them in the annual income tax return or if they have obtained some type of capital gain is almost impossible due to the anonymity that characterizes them . As Pablo Fernández, lawyer of counsel at PwC Legal sums up , if a Spaniard changes their assets to crypto, you should declare the increase in equity. “The reality is that in exchange houses you only have to indicate where you want the cryptocurrencies back. You do not have to identify yourself at any time. Billions of euros are evaded through this channel. The biggest washing machine is in non-payment of taxes ”.

The first regulation that seeks to enclose digital money laundering, although not its tax control, is known as the Fifth Directive. Despite the fact that Spain has failed to comply with the transposition period, with which the legal consequences still remain in limbo, the European Commission regulates virtual currency service providers that exceed 10,000 euros and requires the identification of those who use prepaid cards for an amount greater than 150 euros.

As with any currency, the value of cryptocurrencies fluctuates. The financial estimates quantify the total volume of these thousands of assets at around 250,000 million euros. And there is not only bitcoin or ether. Mark Zuckerberg has probed the market with the possible launch of Libra . What’s more, cybercriminals like it pretty cute because it’s completely anonymous. “Nobody knows what account is received or amount is sent or anything. It’s like a black box, ” says Rodríguez.

But it is not the only thing that convinces them. Andan also in love with what is known as stablecoins , a CriptOS emerged with the intention of reducing the usual speculation and market volatility . DAI, Tehter or ZXR are proper names to remember; and used to clean black money. “It makes no sense that they have euros when these stable values exist. If they get 10 million for a cyberattack, these coins do not vary more than 1%. They would keep all the value obtained in a criminal way, ”concludes Fernández. Organized crime knows how to deal with what is alleged, that what is illegal they already know more than well.

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