What are the most common bitcoin-related money laundering offenses?

What impact does bitcoin have on crime in your area? The ‘wild west days of bitcoins are over, but criminals have not abandoned it entirely. According to new research published by Europol, cryptocurrencies have the potential to become a preferred channel for money laundering in the future. 

Police need to understand how these currencies work – and their limitations. As a result, blockchain and cryptocurrencies are currently two of the most talked-about technologies in international law enforcement and government anti-crime circles.

How was police familiarised with how bitcoins work? 

The National High Tech Crime Unit (NHTCU) of the Netherlands’ police is running an EU-funded project. It aims to help investigators understand how criminals can abuse cryptocurrencies. Anonymising tools to launder money, purchase illegal goods and services, hide the proceeds of cybercrime etc. 

To investigate what it calls “the uncharted territory of cryptocurrencies,” the NHTCU analysed more than 40 case studies and spoke to police, banks, and financial investigators around Europe about their battle with cybercrime.

The research aims to support the law enforcement community by providing insights into cryptocurrencies and how they work and insights into how criminals use them. The NHTCU concludes that bitcoin and other cryptocurrencies will “become the ‘highway’ for all categories of cybercrime.”

The anonymous and decentralised nature of transactions between different parties on a blockchain makes tracking physical goods and online contraband like illegal drugs and child exploitation material or identifying those who buy and sell them both difficult and time-consuming.

But despite the difficulties, investigators can still track cryptocurrencies to identify illicit transactions and follow the money trail. Moreover, the NHTCU warns that criminals will exploit future developments in blockchain technologies – such as decentralised applications or smart contracts – to increase their anonymity, evade detection by law enforcement, and maintain their freedom to operate.

For law enforcement agencies, this means that understanding how cryptocurrencies work and the technology underpinning them is critical for tackling money laundering in the future. And they will need to investigate other ways criminals are using anonymising tools to cover their tracks while committing cybercrime or hiding proceeds of crime. Cryptocurrencies will also need to be explained in court, which means police and prosecutors will need to know how they work. Learn more at this platform.

“Following the path of money is not just done through blockchain analysis but through old-fashioned, good, targeted undercover policing.”

The NHTCU suggests that “following the path of money is not just done through blockchain analysis but through old-fashioned, good, targeted undercover policing.”

How does the research focus on the limitations of bitcoins?

This research has considered the limitations of cryptocurrencies regarding their anonymity and ease of use, but future technology offers other ways for criminals to launder money. “Centralised platforms will become obsolete as decentralised (peer-to-peer) marketplaces develop,” says the NHTCU.

Proceeds of crime and evidence will be hidden away in decentralised markets, making it harder to know where to look for them. “The biggest challenge would then become knowing where to look, as the criminal is no longer reliant on a centralised platform,” said one spokesperson from Europol’s European Cybercrime Centre (EC3).

Part of the NHTCU’s ‘Research into Cybercrime & Anonymisation’ project is to raise awareness among investigators about decentralised markets, including how they work and where are they are hosted. The NHTCU also aims to explore possible methods for tracking activity on these platforms that may become available in the future through new research and technology.

The NHTCU will focus on educating investigators and cryptocurrency users about cryptocurrencies in cybercrime. It also makes them understand how to prevent them from becoming involved in it. For example, the law enforcement agency says that responsible people should not embrace anonymity tools without considering their possible misuse – “but we will not be able to stop them,” warns one investigator.

The NHTCU’s research is being released on 30 January 2017. You can download it at Secure Exchange.


It is a critical article as it shows that the ‘crypto-community’ has to work alongside law enforcement agencies if you want cryptocurrency to be successful. Of course, this integration cannot happen overnight and will take time, but this can be done with the right resources and determination. 

You must remember, though, that within your global community, some seek to prey on your less knowledgeable members, and as a result of this, NHTCU has set out to protect your community.

Christophe Rude
Christophe Rude
Articles: 15837