US CRYPTO MONEY LAUNDERING INDICTMENT REFLECTS INCREASED ENFORCEMENT EFFORTS

US CRYPTO MONEY LAUNDERING INDICTMENT REFLECTS INCREASED ENFORCEMENT EFFORTS by Marley Markham

Prosecutors said that the group disguised the origin of the money made from drug trafficking by using it to buy a cryptocurrency called Tether, then sending it to companies controlled by Cartier to convert the cryptocurrency back into US dollars. Once laundered, the money was wired to Colombian shell companies controlled by his three co-conspirators, prosecutors said. 

According to the indictment, the network laundered hundreds of millions of dollars since the beginning of Cartier’s involvement in January 2020, including an estimated $14.5 million between May 2023 and November 2023.

Cartier was arrested in February in Miami, while the five Colombian suspects were arrested in their home country in late April, according to a US Department of Justice press release. 

InSight Crime could not reach the defendants or their attorneys, and prosecutors did not respond to a request for comment.

InSight Crime Analysis

While the indictment shows the vulnerability of cryptocurrencies to criminal misuse in Latin America and the Caribbean, it also suggests a heightened awareness of the issue within law enforcement and a more concerted effort in tackling it.

Due to its decentralized nature and an absence of strong governmental regulation, cryptocurrency offers attractive money laundering opportunities for criminal organizations from the region. The lack of a strong regulatory framework has rendered Latin America unprepared for the growth of crypto-crime, which has been exploited by a range of criminal actors.

Financial crime expert Kenneth Rijock told InSight Crime that money launderers are drawn to cryptocurrency because it operates “outside of normal financial compliance pathways,” making transactions virtually impossible to trace.

He added that “changing the nature of the asset, repeatedly, to confuse and deceive compliance, which is looking for normal pipelines of funds transfer, usually results in a successful operation.” 

This lack of transparency negates law enforcement’s ability to follow the money. The region’s drug trafficking organizations often use virtual currencies to mask their supply chain payments. This is particularly true in the case of Mexican criminal organizations that produce synthetic drugs and import precursor chemicals from suppliers in China and India. 

However, this indictment suggests significant steps being made by law enforcement in tackling the issue. 

The US has led the effort against the misuse of cryptocurrencies. In 2021, it created the National Cryptocurrency Enforcement Team to “tackle complex investigations and prosecutions of criminal misuses of cryptocurrency.