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A decline in cryptocurrency transactions in the past year has correspondingly resulted in a reduction in crypto money laundering activities, according to a recent report by blockchain data firm Chainalysis.
The report highlighted that illicit addresses sent $22.2 billion worth of cryptocurrency to various services in 2023, marking a significant decrease from the $31.5 billion sent in 2022.
“While some of this decline can be attributed to an overall decrease in crypto transaction volume, both legitimate and illicit, the reduction in money laundering activity was more pronounced, with a 29.5% decrease compared to the 14.9% drop in total transaction volume,” the report stated.
Chainalysis also observed shifts in money laundering tactics, noting that more sophisticated crypto criminals are now utilizing bridges and mixers. This evolution suggests that criminals may be diversifying their money laundering efforts across multiple nested services or deposit addresses to evade detection by law enforcement and exchange compliance teams.
The report emphasized that combating crypto crime now requires greater vigilance and understanding of interconnectedness through on-chain activity, given the diffuse nature of illicit activities.
In 2023, crypto and FinTech companies faced fines totaling $5.8 billion due to inadequate financial controls, surpassing penalties against traditional finance firms for the first time. These fines were primarily imposed for failures in conducting proper money laundering measures, customer checks, and other issues related to financial crime.
However, Dennis Kelleher, CEO of the regulation advocacy group Better Markets, cautioned against interpreting these figures as a sign of improvement among traditional banks. He asserted that the high-profile fraud and criminality in the crypto space prompted regulators and prosecutors to divert resources to address these issues and prevent further escalation.
Earlier this month, Cybera, a provider of advanced reporting and prevention tools, integrated with Chainalysis to enhance scam detection and prevention efforts. This collaboration aims to provide government agencies and compliance teams with enhanced insights and tools to combat financial cybercrime effectively.
“By integrating our scam crime intel sourced through our AI-driven platform with Chainalysis’ blockchain data, we’re elevating scam detection and prevention standards,” stated Nicola Staub, CEO of Cybera. “Our joint efforts, focusing on speed and precision, will provide government agencies and compliance teams with unparalleled insights.”
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