Crypto money laundering

The classic model has three stages. Placement brings illicit money into the system, for example by depositing ransomware proceeds or stolen tokens. Layering hides the trail through mixers, chain hopping, peel chains, swaps between assets and chains of shell accounts. Integration returns the funds to the legal economy through exchanges, OTC brokers, merchants or real estate.

Crypto adds speed and global reach, but also a public record that criminals in cash-based systems never have to face. That is why rules such as the FATF standards, the travel rule and EU and US anti-money-laundering laws require exchanges and other service providers to verify customers, screen transactions and report suspicious activity. Typologies seen in enforcement cases include stablecoin cash-out networks, nested exchange accounts and money mules opening accounts in their own names.

Most crypto activity is not laundering, and estimates of illicit share vary widely by methodology. Using a mixer or a privacy wallet is also not laundering in itself, although it can trigger extra scrutiny.