US Treasury: Cash Still Leads in Money Laundering Over Crypto

The US Treasury has revealed that scammers and criminals have turned their focus to using digital currencies for criminal activities.

The agency shared this in its 2024 National Risk Assessments on Money Laundering, Terrorism Financing, and Proliferation Financing.

Crypto’s Minor Role in Money Laundering Compared to Cash

The report outlined the threats, flaws, and risks associated with illicit finance in the United States.

The US Treasury described how criminals use cash and now cryptocurrency to launder money for fraud, drug trafficking, human smuggling, and corruption. The department plans to publish a strategic plan that will include recommendations for resolving the problems raised in its recent report. 

Speaking on crypto and money laundering, the department explained that “while the laundering of drug trafficking proceeds is predominantly cash-based, the use of virtual assets is a growing concern for U.S. law enforcement.”

Cash Remains a Preference for Money Laundering

While cryptocurrencies have become a new tool for crime, bad actors have a major preference for using cash for criminal transactions. The Treasury notes that money launderers prefer cash to other models. This is because of its anonymity, stability, and ubiquity as a form of payment.

According to the report: “Criminals use cash-based money laundering strategies in significant part because cash offers anonymity. They commonly use U.S. currency due to its wide acceptance and stability.”

The US Treasury revealed that transferring US dollar banknotes in large quantities is still a common way for people to launder money both inside and outside of the US. Usually, criminals move funds between countries and deposit them into foreign bank accounts.

The Treasury noted that digital assets have been in flux since its 2022 report. However, the sector regained some stability towards the end of 2023. US authorities require virtual asset service providers, such as crypto exchanges, to adhere to anti-money laundering and counterterrorism funding requirements.

The agency defines VASPs, among other things, as the exchange of virtual assets and fiat money, the transfer of those assets, and their safeguarding. However, the US Treasury claims that some VASPs have failed to comply with US policies, which opens them up to being used for money laundering.

The report cites the popular $4.3 billion Binance.US settlement with US authorities as an example of noncompliance that results in the misuse of exchanges for money laundering.

Finally, the US Treasury lists DeFi protocols as a growing method to move and launder criminal proceeds. Some criminals also rely on crypto-mixing services to transfer money and conceal the source or destination of a transaction.


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