The use of cryptocurrencies in the money laundering process
| Published date | 07 May 2019 |
| Pages | 210-216 |
| Date | 07 May 2019 |
| DOI | https://doi.org/10.1108/JMLC-12-2017-0074 |
| Author | Chad Albrecht,Kristopher McKay Duffin,Steven Hawkins,Victor Manuel Morales Rocha |
| Subject Matter | Financial risk/company failure,Financial compliance/regulation,Financial crime |
The use of cryptocurrencies in the
money laundering process
Chad Albrecht and Kristopher McKay Duffin
Huntsman School of Business, Utah State University, Logan, Utah, USA
Steven Hawkins
Southern Utah University, Cedar City, Utah, USA, and
Victor Manuel Morales Rocha
Autonomous University of Ciudad Juarez
Abstract
Purpose –This paper aims to analyze the money laundering process itself, how cryptocurrencies have
been integrated into this process, and how regulatory and government bodies are responding to this
new form of currency.
Design/methodology/approach –This paper is a theoreticalpaper that discusses cryptocurrenciesand
their role in the money launderingprocess.
Findings –Cryptocurrencieseliminate the need for intermediaryfinancial institutions and allow direct peer-
to-peer financial transactions. Because of the anonymity introduced through blockchain, cryptocurrencies
have been favoredby the darknet and other criminal networks.
Originality/value –Cryptocurrencies are a nascent form of money that first arose with the creation of
bitcoin in 2009. This formof purely digital currency was meant as a direct competitor to government-backed
fiat currency that are controlledby the central banking system. The paper adds to the recent discussions and
debate on cryptocurrenciesby suggesting additional regulation to preventtheir use in money laundering and
corruptionschemes.
Keywords Cryptocurrency, Tax havens, Illegal transactions, Money laundering process,
Regulatory bodies
Paper type Research paper
Introduction
Cryptocurrencies are a group of nascent electronic currenciesthatwereinventedin
2009. The first cryptocurrency, Bitcoin, was created by Satoshi Nakamoto, a pseudonym
for an individual or group of individuals, whose identity is still unknown. Over the past
decade, Bitcoin and other cryptocurrencies have revolutionized the financial world by
creating a stable form of currency that is not backed by any government and allows
encrypted, anonymous transactions (Swartz, 2014). By nature, cryptocurrencies allow
direct peer-to-peer transactions and eliminate the need for a bank or other intermediary
to facilitate financial transactions (Peters, 2015). Such anonymity has allowed the black
market to flourish as cryptocurrencies have enabled individuals to make illegal
financial transactions that are difficult, and in some cases impossible to track (Heilman,
2016):
While Bitcoin and the blockchain were initially thought to be anonymous, recent tools by both the
FBI and other government agencies has allowed individuals, governments, and others “to track”
and “discover”many bitcoin users on the blockchain.
JMLC
22,2
210
Journalof Money Laundering
Control
Vol.22 No. 2, 2019
pp. 210-216
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-12-2017-0074
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
To continue reading
Request your trial