The Pandemic Is Accelerating the Use of Cryptocurrencies to Launder Money, says, Officials
Bitcoin yet again led to a criminal's capture, a suspected human trafficker Ignacio Santoyo in April 2019 in the Caribbean resort of Playa del Carmen.
The Mexican police officials said the prostitution act that extended across Latin America was busted not by the 2,000 women that Satoyo alleged blackmailed and sexually exploited but the cryptocurrency he is suspected of using to launder the proceeds of his operations.
“There’s a transition to committing crimes in cyberspace, like acquiring cryptocurrencies to launder money … and the pandemic is accelerating it,” said Santiago Nieto, head of the Mexican finance ministry’s financial intelligence unit (UIF).
Along with Brazil, Mexico is the only two nations in Latin America that have enacted legislation to track the use of Bitcoin and other cryptos. As per the law passed in 2018, all registered cryptocurrency trading platforms are required to report transfers above 56,000 pesos ($2,830).
According to US and Mexican authorities, the usage of Bitcoin to launder money has seen a particular increase among drug gangs. However, the sum involved in such few cases uncovered has been only thousands or tens of thousands of dollars compared to cash laundry, which is estimated to be $25 billion a year in Mexico alone.
Over the last three years, however, the three Colombian drug gangs were caught laundering millions of dollars via cryptocurrencies.
UIF chief Nieto said criminals are splitting their illicit cash into small amounts and buying bitcoin from them online.
Santoyo was caught after he bought enough BTC to trigger an alert under the law. He and his sister acquired some 441,000 pesos ($22,260) in Bitcoin on crypto-exchange Bitso between May and November 2018.
The new law has led to 1,033 Bitcoin threshold alerts to be triggered so far this year to check if it links to a user involved in criminal behavior.
According to Reuters, about 98% of all Mexico’s transactions above the 56,000 peso threshold in 2020 were flagged by one registered crypto platform alone.
“Both Mexican and Colombian TCOs are increasing their use of virtual currency because of the anonymity and speed of transactions,” said US DEA spokesman Michael Miller. “It is believed the use of virtual currency will only increase in the future.”