What is crypto money laundering?

Crypto money laundering involves concealing illegally obtained funds by funneling them through cryptocurrency transactions to obscure their origin. Criminals may operate offchain but move funds onchain to facilitate laundering.

Traditionally, illicit money was moved using couriers or informal networks like Hawala. However, with the rise of digital assets, bad actors now exploit blockchain technology to transfer large amounts of money. With evolving techniques and increasing regulation, authorities continue working to track and mitigate the misuse of cryptocurrencies for money laundering.

Thanks to sophisticated technologies like cryptocurrencies, criminals find moving large amounts of money simpler. As cryptocurrency adoption has grown, so has illicit activity within the space. In 2023, crypto wallets linked to unlawful activities transferred $22.2 billion, while in 2022, this figure stood at $31.5 billion.