Editing Money laundering (section)

===Methods===

====List of methods====
Money laundering can take several forms, although most methodologies can be categorized into one of a few types. These include "bank methods, smurfing [also known as structuring], currency exchanges, and double-invoicing".<ref name="encyclopedia">[[Lawrence M. Salinger]], ''Encyclopedia of white-collar & corporate crime: A – I, Volume 1'', page 78, {{ISBN|0-7619-3004-3}}, 2005.</ref>
* [[Structuring]]: Often known as ''smurfing'', is a method of placement whereby cash is broken into smaller deposits of money, used to defeat suspicion of money laundering and to avoid anti-money laundering reporting requirements. A sub-component of this is to use smaller amounts of cash to purchase bearer instruments, such as money orders, and then ultimately deposit those, again in small amounts.<ref name="NDIC">{{Cite web |last=National Drug Intelligence Center |date=August 2011 |title=National Drug Threat Assessment |url=https://www.justice.gov/ndic/pubs44/44849/44849p.pdf |access-date=20 September 2011 |page=40 |archive-date=6 October 2011 |archive-url=https://web.archive.org/web/20111006190738/http://www.justice.gov/ndic/pubs44/44849/44849p.pdf |url-status=live }}</ref>
* Bulk cash smuggling: This involves physically smuggling cash to another jurisdiction and depositing it in a financial institution, such as an [[offshore bank]], that offers greater [[bank secrecy]] or less rigorous money laundering enforcement.<ref name="National Money Laundering Threat Assessment">{{Cite web |date=December 2005 |title=National Money Laundering Threat Assessment |url=https://www.justice.gov/dea/pubs/pressrel/011106.pdf |url-status=dead |archive-url=https://web.archive.org/web/20101017094839/http://www.justice.gov/dea/pubs/pressrel/011106.pdf |archive-date=17 October 2010 |access-date=3 March 2011 |page=33 |df=dmy-all}}</ref>
* Cash-intensive businesses: In this method, a business is typically expected to receive a large proportion of its revenue as cash uses its accounts to deposit criminally derived cash. This method of money laundering often causes organized crime and [[corporate crime]] to overlap.<ref>{{Cite web |title=Organized Crime Module 1 Key Issues: Similarities & Differences |url=https://www.unodc.org/e4j/en/organized-crime/module-1/key-issues/similarities-and-differences.html |access-date=18 December 2022 |website=www.unodc.org |archive-date=4 January 2023 |archive-url=https://web.archive.org/web/20230104032823/https://www.unodc.org/e4j/en/organized-crime/module-1/key-issues/similarities-and-differences.html |url-status=live }}</ref> Such enterprises often operate openly and in doing so generate cash revenue from incidental legitimate business in addition to the illicit cash. In such cases, the business will usually claim all cash received as legitimate earnings. Service businesses are best suited to this method, as such enterprises have little or no [[variable cost]]s and/or a large ratio between revenue and variable costs, which makes it difficult to detect discrepancies between revenues and costs. Examples are [[parking structures]], [[strip club]]s, [[tanning salon]]s, [[car wash]]es, [[amusement arcade|arcade]]s, [[Bar (establishment)|bar]]s, [[restaurants]], [[casino]]s, [[barber|barber shops]], [[DVD store]]s, [[movie theaters]], and [[beach resort]]s.
* Trade-based laundering: This method is one of the newest and most complex forms of money laundering.<ref>{{Cite journal |last=Naheem |first=Mohammed Ahmad |date=2015-10-05 |title=Trade based money laundering: towards a working definition for the banking sector |journal=Journal of Money Laundering Control |language=en |volume=18 |issue=4 |pages=513–524 |doi=10.1108/JMLC-01-2015-0002 |issn=1368-5201}}</ref> This involves under- or over-valuing [[invoice]]s to disguise the movement of money.<ref name="Achilles Heel">{{Cite book |last=Baker, Raymond |url=https://archive.org/details/capitalismsachil00raym |title=Capitalism's Achilles Heel |publisher=Wiley |year=2005 |isbn=9780471644880 |url-access=registration}}</ref> For example, the art market has been accused of being an ideal vehicle for money laundering due to several unique aspects of art such as the subjective value of artworks as well as the secrecy of auction houses about the identity of the buyer and seller.<ref name="Has the Art Market Become an Unwitting Partner in Crime?">{{Cite news |last=Has the Art Market Become an Unwitting Partner in Crime? |date=19 February 2017 |title=Has the Art Market Become an Unwitting Partner in Crime? |work=The New York Times |url=https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html |access-date=5 May 2018 |archive-date=6 May 2018 |archive-url=https://web.archive.org/web/20180506035316/https://www.nytimes.com/2017/02/19/arts/design/has-the-art-market-become-an-unwitting-partner-in-crime.html |url-status=live }}</ref> According to the [[National Crime Agency]], one strategy that is favored by high-net-worth individuals is specialist storage facilities. Art kept in these spaces has been used by individuals to evade sanctions and launder the proceeds of crime.<ref>{{cite web |title=UK warns of criminal sanctions evasion through artwork storage facilities |url=https://www.nationalcrimeagency.gov.uk/news/uk-warns-of-criminal-sanctions-evasion-through-artwork-storage-facilities |website=National Crime Agency |access-date=14 July 2024}}</ref>
* [[Shell corporation|Shell companies]] and trusts: Trusts and shell companies disguise the true owners of money. Trusts and corporate vehicles, depending on the jurisdiction, need not disclose their true owner.  Sometimes referred to by the slang term ''rathole'', though that term usually refers to a person acting as the fictitious owner rather than the business entity.<ref name="FATF threat assessment">{{Cite web |last=Financial Action Task Force |title=Global Money Laundering and Terrorist Financing Threat Assessment |url=http://www.fatf-gafi.org/dataoecd/48/10/45724350.pdf |access-date=3 March 2011 |archive-date=26 July 2011 |archive-url=https://web.archive.org/web/20110726050407/http://www.fatf-gafi.org/dataoecd/48/10/45724350.pdf |url-status=dead }}</ref>
* [[Round-tripping (finance)|Round-tripping]]: Here, money is deposited in a [[controlled foreign corporation]] offshore, preferably in a [[tax haven]] where minimal records are kept, and then shipped back as a [[foreign direct investment]], exempt from taxation. A variant of this is to transfer money to a law firm or similar organization as funds on account of fees, then to cancel the retainer and, when the money is remitted, represent the sums received from the lawyers as a legacy under a will or proceeds of litigation.{{citation needed|date=June 2024}}
* Bank capture: In this case, money launderers or criminals buy a controlling interest in a bank, preferably in a jurisdiction with weak money laundering controls, and then move money through the bank without scrutiny.
* Invoice Fraud: An example is when a criminal contacts a company saying that the supplier payment details have changed. They then provide alternative, fraudulent details in order for you to pay them money.<ref>{{Cite news |last=Burton |first=Tom |title=Fraudulent invoices the new trend in business scams |agency=Financial Review |url=https://www.afr.com/politics/federal/fraudulent-invoices-the-new-trend-in-business-scams-20200623-p555dn |access-date=28 October 2021 |archive-date=28 October 2021 |archive-url=https://web.archive.org/web/20211028005704/https://www.afr.com/politics/federal/fraudulent-invoices-the-new-trend-in-business-scams-20200623-p555dn |url-status=live }}</ref>
* [[Casino]]s: In this method, an individual walks into a casino and buys chips with illicit cash. The individual will then play for a relatively short time. When the person cashes in the chips, they will expect to take payment in a check, or at least get a receipt so they can claim the proceeds as [[gambling]] winnings.<ref name="National Money Laundering Threat Assessment" />
* Other gambling: Money is spent on gambling, preferably on high odds games. One way to minimize risk with this method is to bet on every possible outcome of some event that has many possible outcomes, so no outcome(s) have short odds, and the bettor will lose only the [[vigorish]] and will have one or more winning bets that can be shown as the source of money. The losing bets will remain hidden.
* Black salaries: A company may have unregistered employees without written contracts and pay them cash salaries. Dirty money might be used to pay them.<ref name="Underground Economy Issues. Ontario Construction Secretariat">{{Cite web |title=Underground Economy Issues. Ontario Construction Secretariat |url=http://www.iciconstruction.com/resources/industry_publications/underground_economy_issues.cfm |url-status=dead |archive-url=https://web.archive.org/web/20101216010105/http://www.iciconstruction.com/resources/industry_publications/underground_economy_issues.cfm |archive-date=16 December 2010 |df=dmy-all}}</ref>
* [[Tax amnesty|Tax amnesties]]: For example, those that legalize unreported assets and cash in tax havens.<ref>{{Cite web |title=Tax amnesties turn HMRC into 'biggest money-laundering operation in history' |url=http://blogs.telegraph.co.uk/finance/ianmcowie/100011790/tax-amnesties-turn-hmrc-into-biggest-money-laundering-operation-in-history |url-status=dead |archive-url=https://web.archive.org/web/20111128103750/http://blogs.telegraph.co.uk/finance/ianmcowie/100011790/tax-amnesties-turn-hmrc-into-biggest-money-laundering-operation-in-history/ |archive-date=28 November 2011 |access-date=14 June 2013}}</ref>
* Transaction Laundering: When a merchant unknowingly processes illicit credit card transactions for another business.<ref>{{Cite web |title=Merchant-based money laundering Part 3: The medium is the method - ACFCS {{!}} Association of Certified Financial Crime Specialists {{!}} A BARBRI, Inc. Company |url=https://www.acfcs.org/news/364876/Merchant-based-money-laundering-Part-3-The-medium-is-the-method.htm |access-date=2019-01-08 |website=www.acfcs.org |archive-date=1 April 2019 |archive-url=https://web.archive.org/web/20190401101454/https://www.acfcs.org/news/364876/Merchant-based-money-laundering-Part-3-The-medium-is-the-method.htm |url-status=dead }}</ref> It is a growing problem<ref>{{Cite web |title=The Growing Threat of Transaction Laundering {{!}} Legal Solutions |url=https://store.legal.thomsonreuters.com/law-products/solutions/clear-investigation-software/anti-money-laundering/the-growing-threat-of-transaction-laundering |access-date=2019-01-08 |website=store.legal.thomsonreuters.com |archive-date=8 January 2019 |archive-url=https://web.archive.org/web/20190108201017/https://store.legal.thomsonreuters.com/law-products/solutions/clear-investigation-software/anti-money-laundering/the-growing-threat-of-transaction-laundering |url-status=live }}</ref><ref>{{Cite web |title=Transaction laundering in 2019 – time to review the monitoring strategy {{!}} The Paypers |url=https://www.thepaypers.com/expert-opinion/transaction-laundering-in-2019-time-to-review-the-monitoring-strategy/776727 |access-date=2019-01-09 |website=www.thepaypers.com |language=en |archive-date=14 July 2020 |archive-url=https://web.archive.org/web/20200714025734/https://thepaypers.com/expert-opinion/transaction-laundering-in-2019-time-to-review-the-monitoring-strategy/776727 |url-status=live }}</ref> and recognised as distinct from traditional money laundering in using the payments ecosystem to hide that the transaction even occurred<ref>{{Cite web |date=2018-04-26 |title=Transaction Laundering: Growing Fraud Risk for Merchants |url=https://www.threatmetrix.com/digital-identity-blog/fraud-prevention/transaction-laundering-a-growing-fraud-risk-for-merchants/ |access-date=2019-01-08 |website=ThreatMetrix |language=en-US |archive-date=8 January 2019 |archive-url=https://web.archive.org/web/20190108201111/https://www.threatmetrix.com/digital-identity-blog/fraud-prevention/transaction-laundering-a-growing-fraud-risk-for-merchants/ |url-status=live }}</ref> (e.g. the use of fake front websites<ref>{{Cite news |date=2017-06-22 |title=Exclusive: Fake online stores reveal gamblers' shadow banking system |language=en |work=Reuters |url=https://www.reuters.com/article/us-gambling-usa-dummies-exclusive-idUSKBN19D137 |access-date=2019-01-08 |archive-date=9 January 2019 |archive-url=https://web.archive.org/web/20190109011840/https://www.reuters.com/article/us-gambling-usa-dummies-exclusive-idUSKBN19D137 |url-status=live }}</ref>). Also known as "undisclosed aggregation" or "factoring".<ref>{{Cite web |title=G2 Transaction Laundering Detection |url=https://www.g2webservices.com/acquiring/g2-portfolio-protection/transaction-laundering/ |access-date=2019-01-08 |website=G2 Web Services |language=en-US |archive-date=8 January 2019 |archive-url=https://web.archive.org/web/20190108201154/https://www.g2webservices.com/acquiring/g2-portfolio-protection/transaction-laundering/ |url-status=dead }}</ref><ref>{{Cite web |last=((raytodd2017)) |date=2018-09-17 |title=Transaction laundering and high-risk payment processors |url=https://raytodd.blog/2018/09/17/transaction-laundering-and-high-risk-payment-processors/ |access-date=2019-01-08 |website=raytodd.blog |language=en |archive-date=9 January 2019 |archive-url=https://web.archive.org/web/20190109011803/https://raytodd.blog/2018/09/17/transaction-laundering-and-high-risk-payment-processors/ |url-status=dead }}</ref>
* Online job marketplaces such as [[Freelancer.com]] and [[Fiverr]], which accept funds from clients and hold them in [[escrow]] to pay freelancers.  A money launderer can post a token job on one of these sites, and send the money for the site to hold in escrow. The launderer (or his associate) can then sign on as a freelancer (using a different account and IP address), accept and complete the job, and be paid the funds.<ref name="Wired.uk">{{Cite magazine |last=Solon |first=Olivia |date=October 21, 2013 |url-access=subscription |title=Cybercriminals launder money using in-game currencies |url=https://www.wired.co.uk/news/archive/2013-10/21/money-laundering-online |magazine=Wired |access-date=22 October 2013 |url-status=live |archive-url=https://web.archive.org/web/20131024160117/https://www.wired.co.uk/news/archive/2013-10/21/money-laundering-online |archive-date= Oct 24, 2013 }}</ref>
* Through Sports: Investigation teams have identified sport profits as a common way to launder money. In Latin America, in particular, drug traffickers are frequently found to own Soccer Clubs, and to launder money through their intermediate, by buying and selling players, selling tickets and merchandise.<ref>{{Cite news |title=As a trafficker pursued dreams of soccer glory, investigators closed in |newspaper=[[Washington Post]] |url=https://www.washingtonpost.com/world/interactive/2024/sebastian-marset-cocaine-investigation-soccer-football/ |last=Sieff |first=Kevin |date=2024-07-18 |quote='They buy a Colombian player from a very low-level soccer team and then take him to play in the Croatian Soccer League. But they sell him for 100 times or 200 times more than what he cost,' said a Colombian police official |author-link=Kevin Sieff}}</ref>

====Digital electronic money====
{{see also|Cryptocurrency and crime}}

In theory, [[electronic money]] should provide as easy a method of transferring value without revealing identity as untracked banknotes, especially wire transfers involving anonymity-protecting numbered bank accounts.  In practice, however, the record-keeping capabilities of Internet service providers and other network resource maintainers tend to frustrate that intention.  While some [[cryptocurrency|cryptocurrencies]] under recent development have aimed to provide more possibilities of transaction anonymity for various reasons, the degree to which they succeed — and, in consequence, the degree to which they offer benefits for money laundering efforts — is controversial. Solutions such as [[Zcash|ZCash]] and [[Monero]] ― known as ''privacy coins''<ref>{{Cite book |last1=Larkin |first1=Charles |title=Understanding Cryptocurrency Fraud. The challenges and headwinds to regulate digital currencies |last2=Pearce |first2=Nick |last3=Shannon |first3=Nadine |date=2022 |publisher=De Gruyter |isbn=978-3-11-071688-7 |editor-last=Corbet |editor-first=Shaen |location=Boston/Berlin |pages=141 f |chapter=Criminality and cryptocurrencies: Enforcement and policy responses – Part II}}</ref> ― are examples of cryptocurrencies that provide unlinkable anonymity via proofs and/or obfuscation of information ([[ring signature]]s).<ref>Cf. {{Cite journal |last1=Kethineni |first1=Sesha |last2=Cao |first2=Ying |date=2020 |title=The Rise in Popularity of Cryptocurrency and Associated Criminal Activity |journal=International Criminal Justice Review |volume=30 |issue=3 |pages=334 |doi=10.1177/1057567719827051|s2cid=150755683 }}</ref> While not suitable for large-scale crimes, privacy coins like Monero are suitable for laundering money made through small-scale crimes.<ref>{{Cite book |last=Hou |first=Greg |title=Understanding Cryptocurrency Fraud. The challenges and headwinds to regulate digital currencies |date=2022 |publisher=De Gruyter |isbn=978-3-11-071688-7 |editor-last=Corbet |editor-first=Shaen |location=Boston/Berlin |pages=88 |chapter=Cryptocurrency money laundering and exit scams: Cases, regulatory responses and issue}}</ref>

Apart from traditional cryptocurrencies, [[NFT|Non-Fungible Token]]s (NFTs) are also commonly used in connection with money laundering activities.<ref>{{Cite report |url=https://rusi.org/explore-our-research/publications/commentary/nfts-new-frontier-money-laundering |title=NFTs: A New Frontier for Money Laundering? |last1=Owen |first1=Allison |last2=Chase |first2=Isabella |date=2 December 2021 |publisher=Royal United Services Institute |access-date=12 January 2023 |archive-date=16 January 2022 |archive-url=https://web.archive.org/web/20220116131322/https://rusi.org/explore-our-research/publications/commentary/nfts-new-frontier-money-laundering/ |url-status=live }}</ref> NFTs are often used to perform [[Wash Trade|Wash Trading]] by creating several different [[Cryptocurrency wallet|wallets]] for one individual, generating several fictitious sales and consequently selling the respective NFT to a third party.<ref>{{Cite report |url=https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf |title=Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art |publisher=[[United States Department of the Treasury]] |page=27 |access-date=12 January 2023 |year=2022 |archive-date=13 April 2022 |archive-url=https://web.archive.org/web/20220413071205/https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf |url-status=live }}</ref> According to a report by [[Chainalysis]], these types of wash trades are becoming increasingly popular among money launderers especially due to the largely anonymous nature of transactions on NFT marketplaces.<ref>{{Cite web |last=Quiroz-Gutierrez |first=Marco |date=4 February 2022 |title=A handful of NFT users are making big money off of a stealth scam. Here's how 'wash trading' works |url=https://fortune.com/2022/02/04/nft-wash-trade-scam-millions/ |access-date=12 January 2023 |website=Fortune |archive-date=15 December 2022 |archive-url=https://web.archive.org/web/20221215090338/https://fortune.com/2022/02/04/nft-wash-trade-scam-millions/ |url-status=live }}</ref><ref>{{Cite web |date=2 February 2022 |title=Crime and NFTs: Chainalysis Detects Significant Wash Trading and Some NFT Money Laundering In this Emerging Asset Class |url=https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-nft-wash-trading-money-laundering/ |access-date=12 January 2023 |publisher=Chainalysis |archive-date=6 December 2022 |archive-url=https://web.archive.org/web/20221206010533/https://blog.chainalysis.com/reports/2022-crypto-crime-report-preview-nft-wash-trading-money-laundering/ |url-status=live }}</ref> Auction platforms for NFT sales may face regulatory pressure to comply with anti-money laundering legislation.<ref>Cf. {{Cite report |url=https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf |title=Study of the Facilitation of Money Laundering and Terror Finance Through the Trade in Works of Art |publisher=United States Department of the Treasury |page=26 |access-date=12 January 2023 |year=2022 |archive-date=13 April 2022 |archive-url=https://web.archive.org/web/20220413071205/https://home.treasury.gov/system/files/136/Treasury_Study_WoA.pdf |url-status=live }}</ref>

Additionally, [[Cryptocurrency tumbler|cryptocurrency mixers]] have been increasingly used by cybercriminals over the past decade to launder funds.<ref>{{Cite web |last=Team |first=Chainalysis |date=2022-07-14 |title=Mixer Usage Reaches All-time Highs in 2022 |url=https://blog.chainalysis.com/reports/crypto-mixer-criminal-volume-2022/ |access-date=2023-04-23 |website=Chainalysis |language=en-US |archive-date=23 April 2023 |archive-url=https://web.archive.org/web/20230423003145/https://blog.chainalysis.com/reports/crypto-mixer-criminal-volume-2022/ |url-status=live }}</ref> A mixer blends the cryptocurrencies of many users together to obfuscate the origins and owners of funds, enabling a greater degree of privacy on public blockchains like [[Bitcoin]] and [[Ethereum]].<ref>{{Cite web |last=Team |first=Chainalysis |date=2022-08-23 |title=Crypto Mixers and AML Compliance |url=https://blog.chainalysis.com/reports/crypto-mixers/ |access-date=2023-04-23 |website=Chainalysis |language=en-US |archive-date=23 April 2023 |archive-url=https://web.archive.org/web/20230423003143/https://blog.chainalysis.com/reports/crypto-mixers/ |url-status=live }}</ref> Although not explicitly illegal in many jurisdictions, the legality of mixers is controversial.<ref>{{Cite news |last=Yaffe-Bellany |first=David |date=2022-09-08 |title=Investors Sue Treasury Department for Blacklisting Crypto Platform |language=en-US |work=The New York Times |url=https://www.nytimes.com/2022/09/08/business/tornado-cash-treasury-sued.html |access-date=2023-04-23 |issn=0362-4331 |archive-date=23 April 2023 |archive-url=https://web.archive.org/web/20230423003142/https://www.nytimes.com/2022/09/08/business/tornado-cash-treasury-sued.html |url-status=live }}</ref> The use of the mixer [[Tornado Cash]] in the laundering of funds by the [[Lazarus Group]] led the [[Office of Foreign Assets Control]] to sanction it, prompting some users to sue the Treasury Department.<ref>{{Cite web |last=Yaffe-Bellany |first=David |date=8 September 2022 |title=Investors Sue Treasury Department for Blacklisting Crypto Platform |url=https://www.nytimes.com/2022/09/08/business/tornado-cash-treasury-sued.html |access-date=22 April 2023 |website=The New York Times |archive-date=23 April 2023 |archive-url=https://web.archive.org/web/20230423003142/https://www.nytimes.com/2022/09/08/business/tornado-cash-treasury-sued.html |url-status=live }}</ref> Proponents have argued mixers allow users to protect their privacy and that the government lacks the authority to restrict access to decentralized software. In the United States, [[Financial Crimes Enforcement Network|FinCEN]] requires mixers to register as money service businesses.<ref>{{Cite web |last=Network |first=Financial Crimes Enforcement |date=9 May 2019 |title=Application of FinCEN's Regulations to Certain Business Models Involving Convertible Virtual Currencies |url=https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-certain-business-models |access-date=22 April 2023 |website=fincen.gov |archive-date=23 April 2023 |archive-url=https://web.archive.org/web/20230423003145/https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-certain-business-models |url-status=live }}</ref>

In 2013, [[Jean-Loup Richet]], a research fellow at [[ESSEC]] ISIS, surveyed new techniques that cybercriminals were using in a report written for the [[United Nations Office on Drugs and Crime]].<ref name="Jean-Loup Richet">{{Cite arXiv |eprint=1310.2368 |class=cs.CY |author=Richet, Jean-Loup |title=Laundering Money Online: a review of cybercriminals methods |date=June 2013}}</ref> A common approach was to use a [[digital currency exchanger]] service which converted dollars into a digital currency called [[Liberty Reserve]], and could be sent and received anonymously. The receiver could convert the Liberty Reserve currency back into cash for a small fee. In May 2013, the US authorities shut down Liberty Reserve, charging its founder and various others with money laundering.<ref name="Wired">{{Cite magazine |last=Zetter, Kim |date=May 2013 |title=Liberty Reserve founder indicted on $6 billion money-laundering charges |url=https://www.wired.com/threatlevel/2013/05/liberty-reserve-indicted/ |magazine=Wired |access-date=20 October 2013 |archive-date=26 October 2013 |archive-url=https://web.archive.org/web/20131026031250/http://www.wired.com/threatlevel/2013/05/liberty-reserve-indicted |url-status=live }}</ref>

Another increasingly common way of laundering money is to use online gaming. In a growing number of online games, such as ''[[Second Life]]'' and ''[[World of Warcraft]],'' it is possible to [[gold farming|convert money into virtual goods, services, or virtual cash]] that can later be converted back into money.<ref name="Wired.uk" />

To avoid the usage of decentralized digital money such as [[Bitcoin]] for the profit of crime and corruption, Australia is planning to strengthen the nation's anti-money laundering laws.<ref name="ABC">{{Cite news |date=22 October 2017 |title=Bitcoin one step closer to being regulated in Australia under new anti-money laundering laws |work=ABC News |url=http://www.abc.net.au/news/2017-10-23/bitcoin-one-step-closer-to-being-regulated-in-australia/9058582 |access-date=18 Dec 2017 |archive-date=17 December 2017 |archive-url=https://web.archive.org/web/20171217183707/http://www.abc.net.au/news/2017-10-23/bitcoin-one-step-closer-to-being-regulated-in-australia/9058582 |url-status=live }}</ref> The characteristics of Bitcoin—it is completely deterministic, protocol-based and can be difficult to censor<ref>{{cite web |title=Why Is Bitcoin Censorship Resistant? |url=https://www.nasdaq.com/articles/why-is-bitcoin-censorship-resistant |website=Nasdaq |access-date=28 March 2025}}</ref>—make it possible to circumvent national laws using services like [[Tor (network)|Tor]] to obfuscate transaction origins. Bitcoin relies completely on cryptography, not on a central entity running under a [[Know your customer|KYC]] framework. There are several cases in which criminals have cashed out a significant amount of [[Bitcoin]] after ransomware attacks, drug dealings, cyber fraud and gunrunning.<ref name="cnbc.com">{{Cite web |date=3 August 2017 |title=Hackers have cashed out on $143,000 of bitcoin from the massive WannaCry ransomware attack |url=https://www.cnbc.com/2017/08/03/hackers-have-cashed-out-on-143000-of-bitcoin-from-the-massive-wannacry-ransomware-attack.html |access-date=18 Dec 2017 |website=[[CNBC]] |archive-date=27 January 2018 |archive-url=https://web.archive.org/web/20180127143206/https://www.cnbc.com/2017/08/03/hackers-have-cashed-out-on-143000-of-bitcoin-from-the-massive-wannacry-ransomware-attack.html |url-status=live }}</ref> However, many digital currency exchanges are now operating KYC programs under threat of regulation from the jurisdictions they operate.<ref>{{Cite news |date=2015-04-23 |title=Bitcoin Island: cleaning up the crypto currency |language=en-GB |work=BBC News |url=https://www.bbc.com/news/business-32394170 |access-date=2021-02-17 |archive-date=9 April 2021 |archive-url=https://web.archive.org/web/20210409220802/https://www.bbc.com/news/business-32394170 |url-status=live }}</ref><ref>{{Cite web |last=Bharathan |first=Vipin |title=Central Bankers And Crypto-Twitter Perennially In Opposition; Analysis Of Scale Of Crypto-Crime And The Prospect For Regulation |url=https://www.forbes.com/sites/vipinbharathan/2021/01/22/central-bankers-and-crypto-twitter-perennially-in-opposition-analysis-of-scale-of-crypto-crime-and-the-prospect-for-regulation/ |access-date=2021-02-17 |website=Forbes |language=en |archive-date=25 February 2021 |archive-url=https://web.archive.org/web/20210225204819/https://www.forbes.com/sites/vipinbharathan/2021/01/22/central-bankers-and-crypto-twitter-perennially-in-opposition-analysis-of-scale-of-crypto-crime-and-the-prospect-for-regulation/ |url-status=live }}</ref>

====Reverse money laundering====
{{see also|Hawala and crime}}

Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes.<ref name="REVERSE LAUNDERING">{{Cite web |last=International Federation of Accountants |title=Anti-Money Laundering |url=http://www.ifac.org/sites/default/files/publications/files/anti-money-laundering-2n.pdf |access-date=27 March 2014 |archive-date=28 March 2014 |archive-url=https://web.archive.org/web/20140328133527/http://www.ifac.org/sites/default/files/publications/files/anti-money-laundering-2n.pdf |url-status=dead }}</ref> It is usually perpetrated for the purpose of financing terrorism<ref>{{Cite journal |last=Cassella |first=S.D. |year=2003 |title=Reverse money laundering |journal=Journal of Money Laundering Control |volume=7 |issue=1 |pages=92–94 |doi=10.1108/13685200410809814}}</ref> but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries.<ref>{{Cite journal |last=Zabyelina |first=Yuliya |year=2015 |title=Reverse money laundering in Russia: Clean cash for dirty ends |journal=Journal of Money Laundering Control |volume=18 |issue=2 |pages=202–221 |doi=10.1108/JMLC-10-2014-0039}}</ref> For example, in an [[affidavit]] filed on 24 March 2014 in [[United States District Court for the Northern District of California|United States District Court, Northern California]], San Francisco Division, FBI special agent Emmanuel V. Pascua alleged that several people associated with the [[Chee Kung Tong]] organization, and California State Senator [[Leland Yee]], engaged in reverse money laundering activities.

The problem of such fraudulent encashment practices (''obnalichka'' in Russian) has become acute in Russia and other countries of the former Soviet Union. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) reported that the Russian Federation, Ukraine, Turkey, Serbia, Kyrgyzstan, Uzbekistan, Armenia and Kazakhstan have encountered a substantial shrinkage of tax base and shifting money supply balance in favor of cash. These processes have complicated the planning and management of the economy and contributed to the growth of the [[shadow economy]].<ref>EAG. "[http://eurasiangroup.org/WGTYP_2012_10_eng.pdf Money laundering and terrorist financing with use of physical cash and bearer instruments] {{Webarchive|url=https://web.archive.org/web/20171013064519/http://eurasiangroup.org/WGTYP_2012_10_eng.pdf |date=13 October 2017 }}", 17th Plenary Meeting of the Eurasian Group on Combating Money Laundering and Financing of Terrorism, 28 December 2012, New Delhi.</ref>