Europe’s top policeman has joined the clamour for more regulation of cryptocurrency to stop organised crime gangs from laundering their illicit cash.
Europol director Rob Wainwright reckons criminals generate £100 billion each year from people trafficking, drugs, illegal weapons and other activities – and that between £3 billion and £4 billion is washed clean through cryptocurrency.
“It’s growing quite quickly and we’re quite concerned,” said Wainwright, who heads the European Union Agency for Law Enforcement Cooperation.
Cryptocurrency is a term that covers a range of digital currencies, such as Bitcoin, Litecoin, Ethereum and Ripple.
Around 1,000 cryptocurrencies are live online representing up to £100 billion of pounds of cash.
Money moves without any borders
Money laundering is much easier as digital currency can be moved online without crossing any physical borders. Cryptocurrencies are not regulated by central banks or governments, so many of the transactions are secret, rendering criminals and their activities invisible.
“They’re not banks and governed by a central authority, so the police cannot monitor those transactions,” said Wainwright.
“And if they do identify them as criminal they have no way to freeze the assets unlike in the regular banking system.”
He explained cash is converted into Bitcoin, divided into smaller amounts and moved around the system by people unconnected to the criminals.
They convert the cash back to pounds or US dollars and give the clean money back to the crooks.
Governments urged to act
“It’s very difficult for the police in most cases to identify who is cashing this out,” Wainwright said.
One trend police have spotted is criminals switching the proceeds from selling illegal drugs across Europe into Bitcoin.
Europol is calling for European governments and police forces to act.
“They have to take a responsible action and collaborate with us when we are investigating very large-scale crime,” he said. “I think they also have to develop a better sense of responsibility around how they’re running virtual currency.”
Recently, British Prime Minister Theresa May warned governments needed to put together policies to police cryptocurrencies and take control of the murky world of digital currencies and crime.
The UK Parliament’s Treasury Select Committee is investigating cryptocurrencies, while EU regulations demanding traders disclose their identities are expected later this year.