Drug traffickers increasingly relied on cryptocurrency-based transactions and technology in 2020 — due in part to the COVID-19 pandemic, according to a new report from the Drug Enforcement Administration’s Strategic Intelligence Section.
Per the agency’s findings in the 2020 National Drug Threat Assessment, published on March 2, the pandemic halted cross-border shipments, particularly between the U.S. and Mexico, which led to large amounts of money stuck in the U.S. that still needed to be given to international narcotics sellers. Crypto ATMs offered one way for money to move across borders without couriers having to physically transport it, according to the report.
The DEA’s document offers no statistics or numbers on cryptocurrency-related crime for last year but said: “Increasingly, money laundering operations are using virtual currency automatic teller machines (ATMs) to aid in the movement of illicit bulk currency.”
As the report notes:
“Drug traffickers and money launderers are increasingly incorporating virtual currency into [trade-based money laundering (TBML)] activity as the use of these currencies becomes more widely adopted. DEA reporting has revealed instances in which bulk currency contracts were fulfilled through the use of virtual currency instead of cash, with this money subsequently being integrated into the TBML cycle.”
While crypto ATMs face the same anti-money laundering regulations as any money service business, DEA reporting found that “unscrupulous owners” may allow drug traffickers to deposit large amounts of cash into the virtual currency machines and hide the origins of the funds.
“These combinations of virtual currency with already established forms of money laundering suggest an increased willingness by illicit actors to utilize this complex technology to further their money laundering endeavors,” the DEA said in the report.
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