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In summary
- The NCA dismantled Russian money laundering networks, with 84 arrests and $25,500 in cash and Cryptocurrency seized.
- The operations included global transfers using cryptocurrencies to avoid sanctions and hide money movements.
- Experts highlighted the use of OTC desks and the need for international cooperation to track illicit funds.
The United Kingdom’s National Crime Agency (NCA) reported last week that it dismantled Russian money laundering operations involving cryptocurrencies.
The operation has so far led to 84 arrests and the seizure of more than $25,500 (£20,000) in cash and cryptocurrency, according to a recent NCA announcement. The investigation led the US Treasury Department’s Office of Foreign Assets Control (OFAC) to announce sanctions against Russian speakers and four companies involved in sanctions evasion networks.
“Operation Destabilize” was not limited to the United Kingdom and included actions taken in the Middle East, Russia and South America. Former Dallas police officer Byron Boston, CEO of cryptocurrency tracking firm Crypto Track, told Decrypt that “the global nature of cryptocurrencies often places investigations at the mercy of inconsistent international regulation and cooperation. “
In one example, Byron assisted the United States Department of Homeland Security investigating $1,000 of cryptocurrency being laundered. Agents “were able to immediately identify the international exchange” but the exchange “requested a mutual legal assistance treaty” to release the relevant data.
This type of bureaucracy is often detrimental to the recovery of funds. Byron mentioned that “unfortunately, this is not a quick process and often cryptocurrencies are liquidated before obtaining the MLAT.”
The announcement did not specify how much the two money laundering networks discovered — Smart and TGR — relied on cryptocurrencies for their operations. However, the announcement explains that after operators collected funds in one country, they often used cryptocurrencies for cash transactions to move them to another.
Slava Demchuk, CEO of cryptocurrency forensics and compliance firm AMLBot, told Decrypt that “using over-the-counter (OTC) trading desks in multiple jurisdictions, criminals can move in and out of cash to obfuscate the on-chain trail.” This can be prevented by “rapid exchange of information with the compliant OTC” and swift sanctions.
The United Kingdom was apparently a hub for such operations, with researchers noting large-scale exchanges occurring across the country “where street-level cash deliveries were followed almost immediately by a movement of cryptocurrencies of the same value.” Criminal groups allegedly used cryptocurrencies “to reinvest in their illicit businesses, purchasing more drugs or firearms without the need to move physical money across borders.”
Edited by Stacy Elliott.
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