Reported by Geoff White

Cutting edge  technology is fast becoming the handmaiden of organised crime, helping some of the world’s most dangerous crooks to move and hide ill-gotten gains. This situation will only get worse, unless governments and the technology industry can find common ground.

As financial digitisation has accelerated, the first stage of the laundering process, placement, has waned in importance for some criminal groups. After all, it really applies only to cash-intensive, often street-based crimes like drug dealing and prostitution. Commensurately more emphasis has therefore been placed on layering and integration. In a world where financial transactions are increasingly logged and tracked by computers, the task of throwing off the investigators and escaping with the loot has become more demanding.

The group with the longest experience of this is computer hackers. They have found new ways to make stolen funds vanish, assisted by the creation of bitcoin and other cryptocurrencies, which not only offer near-anonymous (or at least pseudonymous) payments but stand largely outside the watchful eye of the regulators policing traditional finance.

Other organised-crime operations are waking up to the advantages of digital money-laundering. Even the more traditional, street-based crimes are undergoing digital changes—from the shift of drug-dealing onto the dark web to the explosion of online prostitution services—which open these new laundering routes to them.

As digital money-laundering has boomed, the tech industry has found itself increasingly enmired. That’s not just because of criminals’ use of cutting-edge tech. At a deeper level, there is a confluence between the aspirations of tech disruptors and those of money-launderers.

In essence, launderers are seeking three things: a financial environment with febrile activity and fluid asset prices, so they can move lots of money without arousing suspicion; a global system that makes it easy to deposit crooked cash in, say, Los Angeles and pull it out in London; and non-existent or minimal regulation.

Read full report: https://www.economist.com/by-invitation/2024/06/10/digital-finance-is-a-money-launderers-dream-argues-an-author