Bitcoin laundering: how to deal with
FDD and Ellicit report that less than 1% of Bircoin transactions involves money laundering: “The amount of observed Bitcoin laundering [is] small and darknet marketplaces such as Silk Road and, later, AlphaBay are [generally] the source of almost all of the illicit Bitcoins laundered through conversion services.” Even so, previously Ellicit reported that the number of illicit services increased fivefold from 2013 to 2016. Having said that, the study finds that the sources of illicit funds entering conversion services are quite centralized.
The study provides 5 key-points that will improve the situation:
1. Proper KYC and AML policies need to be enforced on the bitcoin mixers and gambling sites that allow for anonymous usage.
2. Increased AML and KYC compliance at European exchanges.
3. Propaganda campaign against the use of darknet markets by criminals and the general public at large.
4. Regulation of exchanges as Money Service Businesses.
5. Prevention of the illicit use of bitcoin and other cryptocurrencies to get around economic sanctions imposed by the United States or other nations.