A report states that criminals plan scams and money laundering in cryptocurrency wallets. The alliance of drug cartels and hackers is considered an emerging threat.

Organized crime in Latin America might be being financed with cryptocurrencies such as Bitcoin (BTC), according to a report published by the intelligence and security firm Intsights. In the text, it is noted that criminals are using platforms such as Localbitcoins, Paxful or Ccoins to launder large amounts of money and plan scams.

It is stated in the document entitled “The dark side of Latin America: cryptocurrencies, cartels, carding and the rise of cybercrime,” it is stated that very few countries have established laws to counteract money laundering. According to the investigators, this situation is leading those involved to use unregulated exchange sites or those with weak Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols.

The report explains that the financing of threats is evolving in Latin America as organized crime groups turn to cryptocurrencies to launder large amounts of money and dive into the dark web to find and hire hackers. The document also reports that Latin American countries lead the list of the worst money laundering nations in the world.

Concerning the transactions in Localbitcoins, Paxful and Ccoins, the investigation indicates that criminals prefer using these types of P2P platforms rather than the services of centralized cryptocurrency exchanges. The reason for that is that these exchanges “generally lack AML programs and perform little or no due diligence at KYC.”

Among other methods that criminals might be using for money laundering is that of cryptocurrency mixing. It should be stated that it is a commission service offered by various platforms in which potentially detectable funds are combined with others to make it more difficult to determine their origin.

A fact that Intsights disclosed is that 97% of the cryptocurrencies that are bleached eventually go to countries that have weak KYC/AML regulations. The firm also mentioned that Latin American nations lead this list and it identified a growing threat from the alliance of drug cartels and hackers.

New Guidelines

The Intsights study fully covers 2019, a year when cryptocurrency wallets such as Localbitcoins announced that they would establish new security mechanisms for the verification of their users’ identities. In February last year, the exchange site indicated that it would comply with European legislation, such as the 5th Directive against money laundering.

Regarding Paxful, the company established in April last year KYC protocols for operators that used its exchange platform. Besides, the Ccoins service also requires KYC/AML to operate, but in this case, the exchange volumes are significantly lower than in the cases of Localbitcoins and Paxful.

In its report, Intsights highlighted the issue of cybersecurity in Latin America, but it has no offices in the region to deal with it. For this investigation, it conducted a collaborative work jointly with the cybersecurity companies CipherTrace and Scitum. The method used for the investigation included the analysis of restricted databases, dark web sources, and conversations on messaging platforms used by hackers.

By Alexander Salazar


Please enter your comment!
Please enter your name here