Relations Between Money Laundering and Other Crimes

Blog / Relations Between Money Laundering and Other Crimes

Money laundering is a global issue that has an impact on the economies of all nations. It is a method used by criminals to conceal the money they have earned illegally, making it challenging for law authorities to find and seize the proceeds of their crimes. Money laundering is an issue involving a variety of criminal activities, including drug trafficking, fraud, human trafficking, corruption, terrorism, and cybercrime. It is not simply one type of crime.

Criminals use a variety of strategies to move their illegally obtained funds across international borders and to conceal their sources and destinations, which are directly tied to money laundering and other illicit operations.

Environmental crime, drug trafficking, laundering through cryptocurrencies, and casino laundering are among the criminal activities that are closely linked to money laundering.

Environmental Crime is a Growing Source of Money Laundering

Environmental crime includes any criminal activity that harms or exploits the environment, such as wildlife trafficking, illegal logging, illegal fishing, hazardous waste dumping, and other forms of pollution. For criminal organizations, these operations produce large earnings that can be used for money laundering. 

Environmental crimes, such as deforestation, water pollution, and the extinction of animals, can seriously harm the environment. The revenues from these crimes are frequently used to fund terrorism, human trafficking, and drug trafficking, among other unlawful activities. The integrity of financial systems is also threatened by crimes involving waste, fish, minerals, wildlife, forests, and other natural resources. According to the Financial Action Task Force (FATF), such acts are very lucrative criminal activities that produce between USD 110 and 281 billion in illegal revenues per year.

Although the FATF has offered recommendations that both governments and private companies can abide by to stop this activity, very few nations have prioritized stopping environmental crime, which has led to an expected increase in green crime of between 5-7% every year as under-resourced bodies attempt to address this urgent issue. The funding of terrorist organizations, money laundering, and other financial crimes are frequently linked to environmental crime, so businesses must immediately take steps to stop these crimes.

AML measures can help combat green crime, such as environmental fraud, by targeting illicit profits.

Laundering the Proceeds of Drug Trafficking

While violent crimes (such as those involving firearms) are frequently linked to drug trafficking, financial crimes also play a significant role in the activity. Drug traffickers will use the process of money laundering to transform revenue generated from illegal activities into income that comes from what appears to be a legal source (stocks, bonds, and certificates of deposit), or investment in real estate, tourism, and other legal businesses, in order to conceal any illegal activities from law enforcement.

The Western Hemisphere's most effective and comprehensive money laundering "system" at the moment, according to FinCEN, is the Colombian Black Market Peso Exchange. The scheme involves Colombian traffickers who sell their dollar gains to American brokers who deal in pesos at a loss to agents in the U.S. The Colombian broker puts the agreed-upon funds in pesos in the account of the traffickers after the dollars are delivered to the agent in the United States. The broker takes on the risk of entering the cleaned-up money into the US banking system before selling the dollars' stock to Colombian importers who bring in various legal products like computers and cigarettes.

Clinton issued Presidential Decision Directive 42 in 1995, which prohibits American businesses from doing business with front companies used by Colombian drug trafficking organizations and freezes their U.S. assets.

Enforcing money-laundering regulations is the responsibility of a number of organizations, including the FBI, Customs, Drug Enforcement Administration, Internal Revenue Service, Federal Reserve Board, and Treasury. Globally, various national, regional, and global agreements and organizations (such as the Inter-American Drug Abuse Control Council of the Organization of American States) seek to combat money laundering. There are strong anti-money-laundering and asset-forfeiture provisions in the 1988 UN Drug Convention as well.

Money Laundering Through Casinos

Due to their frequent significant cash transactions, the anonymity of their customers, and the ease with which money and chips can be exchanged without the proper documentation, casinos are well known for being susceptible to money laundering. 

The cash-intensive nature of the business, a significant volume of transactions, and a high-risk customer base are all risk considerations in the casino industry (e.g., geographically diverse, high net worth, and lack of an ongoing customer relationship).

Other significant obstacles include the availability of foreign exchange services, the reduced transparency of some customers, such as "high rollers" in VIP rooms, and the use of foreign holding accounts, which make it easy for money in one jurisdiction to be used in a casino in a different jurisdiction. 

Individuals come into these places with big sums of money and can conceal their illicit money while gambling. Simply said, they use their illicit profits to buy casino chips, play a little, and then cash them in. As a result, they enter with dirty money and exit with winnings that are actually clean money.

Casinos in the United States are subject to the BSA. Although the BSA originally only applied to banks, the definition of what qualifies as a "financial institution" has evolved over the years. Because to the heightened risk of criminal exploitation in the gambling industry, commercial casinos were included to the BSA definition in 1985. As a result, regulations unique to the business were developed. Accordingly, if a casino or card club with a U.S. location has gross annual gaming income of more than $1,000,000, it must adhere to BSA rules for casinos.

Money Laundering Through Cryptocurrencies

Cryptocurrencies have gained popularity as an alternative to traditional financial systems, and as a result, they have become a new avenue for money laundering. Money laundering with cryptocurrency follows the typical  pattern of placement-layering-integration, but with a few exceptions:

  • Due to the anonymity of cryptocurrencies at the time of creation, the placement stage of the money laundering process is frequently bypassed.
  • An account ("address") can be made in a matter of seconds and is cost-free. Each account can only be used twice: once to receive money and once to send it somewhere else.
  • A computer script can be used to easily establish a sizable money laundering operation that involves thousands of transfers.
  • It is relatively simple to rationalize unforeseen wealth through cryptocurrencies because to the quick gains in exchange rates, with some coins seeing 10,000% growth.

money laundering and terrorist financing risks facing by crypto industry and guide for prevention

Several cryptocurrency-related technologies can be abused for money laundering objectives, including:

Privacy coins

Cryptocurrencies known as "privacy coins" provide a higher level of anonymity for blockchain transactions, making them even less traceable than "regular" cryptocurrencies. The increased level of anonymity can be attained, for example, by hiding user addresses from others, along with facts about the balance and the place of origin of the coins. This differs from how "regular" cryptocurrencies operate, where anybody may view an address's balance and any transactions made between addresses. Other coins, such as Monero, are secret by design, though.


There are numerous systems that "mix" or "blend" potentially identifiable cryptocurrency funds in order to obscure the point of origin and so render them untraceable. Several sources of cryptocurrency coins (the money) are first transmitted to a single address (the account). The cash are divided into many parts and distributed to various addresses after being combined or blended together in that one address. Until the cash reaches its final destination, this procedure could be repeated multiple times.

As a result, it is extremely difficult to trace the origin of the funds.

Efforts to combat money laundering through cryptocurrencies involve collaboration between law enforcement agencies and financial regulators, as well as the implementation of strict regulations and monitoring systems on cryptocurrency exchanges. These measures aim to identify and track suspicious transactions and prevent criminals from using cryptocurrencies as a means of laundering their ill-gotten gains.

In conclusion, criminals employ money laundering to conceal the proceeds of their crimes and it is frequently connected to a number of other illegal acts. To counteract these illegal operations and stop criminals from profiting from their illegal actions, it is essential to comprehend the connection between money laundering and other crimes.

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