Cryptocurrency As a Money Laundering Tool

By Mhd. Fadly Siregar, S.H.

26 Oct 2024 08:34 WIB 26 October 2024 08:34 WIB 7 minutes reading time: 7 minutes 76 read

This article discusses the definition of cryptocurrency as a decentralized digital financial system, as well as the risks of money laundering that exploit the anonymity and lack of regulation in crypto. D...

Cryptocurrency As a Money Laundering Tool

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Table of Contents

Understanding Cryptocurrency
Money laundering usually consists of three main stages as follows:
(structuring), which is an activity carried out by dividing large amounts of money into several small transactions so as not to be detected by the authorities.
Characteristics of Crypto that Facilitate Money Laundering
Money Laundering Schemes Through Crypto

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Legal Literacy - This article discusses the understanding of cryptocurrency as a decentralized digital financial system, as well as the risk of money laundering that utilizes the anonymity and lack of regulation in crypto. It also outlines the stages of money laundering, the methods used, and the challenges faced by authorities in overcoming these illegal practices.

Understanding Cryptocurrency

Crypto is a digital or virtual currency using cryptographic technology for security. Unlike physical money, crypto is not regulated by governments or Central Banks, but operates on a decentralized network called blockchain. This allows direct transactions between users without intermediaries, like a Bank.

Crypto, as a decentralized financial system, has the understanding that it is a system that is not regulated by a single authority. Instead, transactions are carried out directly between users through a distributed computer network (read "blockchain"). Each user has full control over their assets, and transaction rules are determined by protocols run by the network, not by specific institutions. Thus, no single party can unilaterally control or change the rules. Meanwhile, the conventional (centralized) financial system is a system where certain authorities such as Banks and Governments have full control over transactions and the flow of money. An example is a Bank, all transactions must go through the bank as an intermediary, and the Bank has the authority to regulate financial policies, such as money transfers. The Bank can freeze accounts, change rules, and restrict access.Understanding Money Laundering

Money laundering is the process of concealing the origin of money obtained from illegal activities, so that it appears to have been obtained from legal sources. The main purpose of money laundering is to obscure or clean up the traces of illegal money, so that the money can be used in the financial system without arousing suspicion, and without knowing that the money comes from illegal sources. Money laundering is often associated with crimes such as drug trafficking, fraud, or corruption.