Last year, cryptocurrency activity decreased, resulting in a decline in crypto-related money laundering. According to a report by blockchain data firm Chainalysis, illicit addresses sent $22.2 billion worth of cryptocurrency to services in 2023, a significant decrease from the $31.5 billion sent in 2022.
The report suggests that the overall decrease in crypto transaction volume may have contributed to this drop, but the decline in money laundering activity was even steeper at 29.5%. This could be due to more sophisticated tactics being used by crypto criminals, such as bridges and mixers, to hide their illicit activities.
There is also a possibility that these criminals are diversifying their money laundering activity by using multiple nested services and deposit addresses, making it harder for law enforcement and compliance groups to track and freeze their funds. As a result, combating crypto crime may require a deeper understanding of interconnectedness through on-chain activity.
In 2023, crypto and FinTech companies faced $5.8 billion in fines due to inadequate financial controls, surpassing penalties against traditional financial firms for the first time. These fines were for various issues related to financial crime, such as failure to conduct proper money laundering measures and customer checks.
However, some argue that this is not an indication of improvement among traditional banks, but rather a reflection of the widespread fraud and criminality in the crypto space. Dennis Kelleher, CEO of Better Markets, believes that regulators and prosecutors are diverting resources to address the growing issue of crypto-related fraud.
Recently, Cybera, a provider of advanced tools for reporting and prevention, integrated with Chainalysis to offer insights to government agencies and compliance teams in their efforts to combat scams and prevent financial cybercrime. According to Cybera’s CEO, Nicola Staub, this partnership will elevate scam detection and prevention standards through the combination of their AI-driven platform and Chainalysis’ blockchain data.
