Citigroup Searches for Bitcoin Professionals to Deter Money Laundering

Citigroup is advertising positions for Bitcoin professionals in order to beef up their in-house anti-money laundering operations.

The New York financial services giant Citigroup has posted ads on LinkedIn searching to fill vice president and senior vice president positions that will explore the risks of criminal activity associated with cryptocurrency and other digital payment technologies. The job advertisements stress “knowledge of cryptocurrency and bitcoin monitoring.” Candidates with a Bitcoin Professional Certificate will move to the head of the line.

The position of senior vice president is described on LinkedIn as “support the Global Head of AML Monitoring Risk Management-Emerging Risk by identifying, analyzing, and implementing AML transaction monitoring risk programs related to developments in cybersecurity, cryptocurrency, and emerging payment technologies, products, and methods,”

Including the Bitcoin Professional Certificate is an unusual qualification for a position in such a venerable company. When LinkedIn was searched with the qualification as a keyword only the Citigroup ad was found.

A CPB is unlike similar-sounding qualifications like CPA or CFA as it can be had by paying $50 and taking a 75 question multiple choice test online. The CPB certificate is meant to show a level of proficiency in Bitcoin transactions not to indicate any mastery of the technology that powers the cryptocurrency.

Citi’s Hunt for Certified Crypto Professionals may Indicate a Change in Company Position

The LinkedIn advertisements may indicate a change of position for Citigroup who in the recent past have banned customers from making cryptocurrency purchases with their credit cards. Nor has the group joined other financial giants like Morgan Stanley and Goldman Sachs in clearing Bitcoin futures trades for clients.

Ryan Taylor, the chief executive officer of Dash Core, was quoted by Business Insider as saying;

“Citi is very seriously looking at risks surrounding the nascent market for digital currencies. They are either identifying risk to eliminate certain profiles, or this could be a prerequisite to identifying new opportunities in the space at a later point,”

Despite its apparent hostile position to cryptocurrency, Citigroup has been looking into distributed ledger technology for some years now and have developed their own blockchain in order to run a currency called Citicoin in an attempt at creating a platform similar to Bitcoin.

The financial group had also created an accelerator to fund promising fintech startups in Hong Kong called Citi Mobile Challange Asia- Pacific as far back as the summer of 2015.


Europol Busts Cryptocurrency Drug Money Laundering Ring

A joint operation between global law enforcement agencies and Europol has put an end to a criminal ring that used cryptocurrencies including bitcoin to launder drug money through a Finnish crypto exchange.

The operation, dubbed Tulipan Blanca, saw authorities from Finland, Spain, the United States and Europol arrest 11 individuals related to an organized crime ring that saw drug money laundered from Spain to Colombia using credit cards and several cryptocurrencies, a statement revealed.

A total of 137 individuals were investigated in the criminal ring wherein, initially, drug money was split into small quantities deposited as cash in hundreds of bank accounts. Criminals then acquired credit cards linked to these bank accounts before traveling to Colombia with to make cash withdrawals from the bank accounts using those cards.

A total of 174 bank accounts were used, the investigation revealed, with deposits over €8 million in cash between them. It wasn’t long before the criminals turned to cryptocurrencies, according to the statement.

An excerpt from the statement revealed:

Once the criminals realised that cash withdrawals and bank operations were easy to track, they changed their laundering methods and turned to cryptocurrencies, mainly bitcoin.

The investigation, which saw guidance from Finnish law enforcement, revealed that the criminals had used an unnamed local cryptocurrency exchange to convert their cash into bitcoins before subsequently converting them to Colombian pesos.

Europol, the European Union’s criminal intelligence agency, established a working group alongside Interpol to combat money laundering through cryptocurrencies, last year. With its announcement this week, the agency stressed it would continue to fight against criminal elements using (abusing) cryptocurrencies.

“With cryptocurrencies increasingly used to finance and carry out criminal activities, Europol will continue to coordinate across EU Member States and beyond, to effectively respond to this rising threat,” the agency said. “Europol has organised specialised training courses to assist law enforcement officers in identifying the use of cryptocurrencies by organised crime networks.”

Arizona Bitcoin Trader Convicted for Crypto Money Laundering

By: Wolfie Zhao

An Arizona bitcoin trader been convicted for using the cryptocurrency to launder the proceeds of drug deals.

Thomas Mario Costanzo, who goes by Morpheus Titania on Twitter and operated a peer-to-peer bitcoin exchange website, was found guilty of charges of five money laundering by a federal jury in Phoenix on March 28, according to a Justice Department announcement.

The case stems from a previously reported raid in April 2017 by the U.S. Department of Homeland Security, in which Costanzo was initially arrested for unlawful possession of ammunition that derived from a prior conviction. The DHS further seized Costanzo’s cryptocurrency assets including bitcoin, ethereum and dash, and software pertaining to the tech.

While Costanzo was held in custody following the raid, searches conducted by federal agents at the time raised suspicions that he was using cryptocurrencies to launder proceeds for drug dealers.

The latest conviction came via evidence presented to the federal jury that Costanzo had laundered $164,700 during a two-year period – money taken from undercover federal agents who approached the trader saying they were heroin and cocaine traffickers, according to the announcement.

In addition, evidence was also presented to show that the felon himself used bitcoin to buy drugs, as well as offering an online bitcoin exchange service for others purchasing drugs without implementing know-your-customer authentication procedures.

The Justice Department said each of the five charges can bring a maximum sentence of 20 years in prison, a $250,000 fine, or a combination of the two. Costanzo is expected to face sentence on June 11.

Cryptocurrencies involved in the case may be forfeited by the U.S. government, added the Justice Department.

ICE Agency Charges Payza and Two Canadian Citizens With Bitcoin Money Laundering

This week the U.S. Immigration and Customs Enforcement’s Homeland Security agency (ICE) has revealed that it is charging two Canadian brothers and the company Payza with illegal money transmission and money laundering charges tethered to cryptocurrency transactions.

According to a press statement released by ICE, two Canadian brothers and the firm, Payza, are facing legal troubles for unlicensed money services and alleged money laundering. The firm Payza is a payment processor that utilizes bitcoin and other currencies for daily settlement operations. Payza allegedly processed over $250 million USD worth of proceeds stemming from Ponzi schemes, and other criminal activities. The ICE announcement was revealed by the U.S. Attorney Jessie K. Liu and ICE special agent Patrick J. Lechleitner. The two men facing charges alongside Payza are two Montreal, Québec residents Firoz Patel (43) and Ferhan Patel (37).

“The arrest and indictments, in this case, demonstrate that we will vigorously enforce laws meant to protect the American consumer,” explained U.S. Attorney Liu.

The Patel brothers face conspiracy charges that consist of operating an unlicensed money transmitting business and violating anti-money laundering program requirements. If convicted, each of the brothers face a maximum sentence of more than 25 years. Payza and it’s parent company MH Pillars Ltd. is being charged with one count of illegal money transmission.

The indictment alleges that the brothers and Payza participated in criminal activities from March 2012 until the present. The ICE agency asserts that the brothers through Payza’s services knowingly transmitted funds that were tied to illegal activities.

“Despite receiving cease and desist letters from various states, and being told by a consultant that operating a money transmission business without the necessary licenses was a crime, Firoz and Ferhan Patel continued their illegal activity, the indictment alleges,” ICE details in the press release.

The ICE report says Payza’s customers participated in multiple types of pyramid schemes and allegedly the Patels opened bank accounts in the United States and laundered their illegal proceeds through those accounts. The law enforcement agency has seized properties and funds tied to these charges. ICE has already confiscated $10Mn USD and states the investigation is still underway. The Patel brothers’ case follow other charges against Americans for illegal money transmission and money laundering crimes.

Bitcoin is leading to a huge upswing in money laundering, new research says

By Brooke Crothers

Cybercriminals are turning to cryptocurrencies like Bitcoin to convert illegal revenue into clean cash, new research shows.

Cybercriminal proceeds make up an estimated 8 to 10 percent of total illegal profits laundered globally, according to research released by Bromium, a cybersecurity firm. That slice of illegal profits amounts to an estimated $80 billion to $200 billion each year.

The findings were announced Friday as are part of a larger nine-month study sponsored by Bromium.

“It’s no surprise to see cybercriminals using virtual currency for money laundering,” said the report’s author, Dr. Mike McGuire, senior lecturer in criminology at Surrey University.

“The attraction is obvious. It’s digital, so is an easily convertible way of acquiring and transferring cyber-crime revenue,” McGuire said in a statement.

Property purchases are becoming a popular target for criminals using virtual currency. This allows them to convert illegal proceeds into legitimate cash and assets, the research added.

Websites such as Bitcoin Real Estate “offer everything from penthouse suites and lavish mansions, to 160-acre private islands, all with the option to buy using bitcoins,” according to the study.

Properties purchased with cryptocurrency are not as closely scrutinized as cash purchases. Cryptocurrencies are not yet regulated by any central banks or governments, though increased scrutiny is being placed on them, with Facebook, Twitter and Google banning cryptocurrency-related ads.

About 25 percent of total property sales are predicted to be in cryptocurrency in the next few years, the study found. This worries financial analysts because it allows faster, more covert transactions. “Many with criminal origins [which] could disrupt global property markets,” the study noted.

But as law enforcement monitors Bitcoin more closely, criminals are changing tactics. “Law enforcement agencies are now monitoring Bitcoin, causing many cybercriminals to look for alternatives,” the research said.

“Information on bitcoin transactions can leak during web transactions – typically via web trackers or cookies. This means that connecting transactions to individuals is possible in up to 60 percent of Bitcoin payments,” the study added.

As a result, digital currency platforms like Monero are gaining traction. Platforms such as Monero are designed to be truly anonymous, and other services such as CoinJoin can obscure transaction origins.

The report also cites the conversion of “stolen income” into video game currency or in-game items like gold, which are then converted into bitcoin or other electronic formats.

The study lists video games such as “Minecraft,” “FIFA,” “World of Warcraft,” “Final Fantasy,” “Star Wars Online” and “GTA 5,” which “are among the most popular options because they allow covert interactions with other players that allow trade of currency and goods,” according to the research.

“Gaming currencies and items that can be easily converted and moved across borders offer an attractive prospect to cybercriminals,” McGuire said in the statement. “This trend appears to be particularly prevalent in countries like South Korea and China – with South Korean police arresting a gang transferring $38 million laundered in Korean games, back to China.”

Japan will urge G20 to step up on preventing cryptocurrencies for money laundering, says government official

Via Reuters

Japan will urge its G20 counterparts at a meeting next week to beef up efforts to prevent cryptocurrencies from being used for money laundering, a government official with direct knowledge of the matter said.

Finance ministers and central bankers of the Group of 20 major economies will meet in Buenos Aires on March 19-20, with cryptocurrencies set to be on the agenda.

But the prospects for the G20 finance leaders to agree on specific global rules and mention them in a joint communique are low, given differences in each country’s approach, the official said, a view echoed by another official involved in G20 talks.

“Discussions will focus on anti-money laundering steps and consumer protection, rather than how cryptocurrency trading could affect the banking system,” one of the officials said.

“The general feeling among the G20 members is that applying too stringent regulations won’t be good.”

The Paris-based Financial Action Task Force (FATF), a 37-nation group set up by the G7 industrial powers to fight illicit finance, will report to the G20 its findings on ways to keep cryptocurrencies from being used for money laundering.

Japanese policymakers fear that while there is broad consensus among the G20 nations on the need for such steps, some nations have looser regulations than others, which leaves loopholes for money laundering, the official said.

Japan was the first country to adopt a national system to oversee cryptocurrency trading, although it carried out checks on several exchanges this year after the theft of $530 million from one exchange, Coincheck Inc.

France and Germany have said they will make joint proposals to regulate the bitcoin cryptocurrency market.

A head of the European Union’s watchdog said a short-term strategy could be to focus on applying anti-money laundering and terrorist financing rules, warning consumers of the risk of trading in cryptocurrencies and preventing banks from holding them.

The trick would be to apply regulations to protect consumers and prevent illicit activity, without stifling innovation in the fast-growing crypto-currency and fintech sectors, the Japanese officials said.

Global AML Watchdog to Step Up Crypto Money Laundering Scrutiny

The Financial Action Task Force (FATF), a global inter-governmental body that aims to tackle financial crime, has said it will step up its efforts in monitoring the use of cryptocurrencies in money laundering.

According to a memo published last Friday of its latest meeting, the task force said it has taken on board the findings of a recent report regarding the risks of cryptocurrency money laundering and the regulatory measures being adopted in different countries.

As a result, the FAFT has decided to implement additional initiatives to address the risks of cryptocurrency in money laundering.

Founded in 1989, the task force consists of ministers from its member jurisdictions who help determine standards and execute legal, regulatory and operational measures to fight money laundering, terrorist financing and other cross-border financial crimes.

Although the agency has yet to put out a concrete policy for implementation, the meeting nonetheless signals growing attention from worldwide regulators over illicit uses of cryptocurrency that could undermine the global financial system.

In fact, according to South Korea news agency Yonhap, the country’s financial regulator, the Financial Service Commission, was required to brief other 36 member states on its work bringing in anti-money laundering compliance rules for domestic cryptocurrency exchanges.

As reported previously by CoinDesk, South Korea had long been allowing exchanges in the country to offer trading services for investors via anonymous accounts, which, according to the South Korean customs agency, helped facilitate unregistered mvement of over $600 million in capital.

South Korea subsequently banned anonymous trading accounts and is now requiring exchange platforms to put in place real name verification of accounts before resuming operations.

Latvian Bank Faces U.S. Ban Over Money-Laundering Concerns

The U.S. Treasury Department took the severe step Tuesday of proposing to ban Latvia’s third-biggest bank from the American financial system, saying it helped process illicit transactions, including for entities with alleged ties to North Korea’s ballistic missile program.

Financial institutions in the U.S. would be barred from maintaining correspondent accounts for ABLV Bank AS, effectively ending its ability to transact in U.S. dollars, according to the Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN. ABLV had allowed transactions on behalf of blacklisted entities tied to North Korea’s effort to develop nuclear weapons, as well as corruption in Russia and the Ukraine, the department said.
“ABLV has institutionalized money laundering as a pillar of the bank’s business practices,” Sigal Mandelker, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in a speech Tuesday to compliance executives at a conference in New York. “We are resolved to use our economic authorities to take action against foreign banks that disregard anti-money-laundering safeguards and become conduits for widespread illicit activity.”
The U.S. Treasury relied on “unfounded and misleading information” in reaching its findings and didn’t take into account advances ABLV has made to prevent money laundering and terrorism financing, the bank said in a statement posted on its website.
The bank “shall make every care to rebut this outrageous defamatory information,” it said.

ABLV has 60 days to submit written objections to the finding. U.S. Treasury Secretary Steven Mnuchin has the final say on the imposition of the ban.

Latvia’s bank regulator said it’s cooperating with the European Central Bank, which directly supervises ABLV, and called on the bank to actively communicate with its clients.

ABLV is the 18th financial institution to be designated as a primary money-laundering concern by the Treasury Department since a law giving it authority to do so was passed in 2001. The most recent designation before ABLV was China’s Bank of Dandong in July. It was named for allegedly providing a gateway for North Korea to access the U.S. and international financial systems.

The U.S. made broad-based allegations about ABLV’s lack of anti-money-laundering controls and highlighted its recent transactions on behalf of entities related to North Korea. “ABLV facilitated transactions related to North Korea after the bank’s summer 2017 announcement of a North Korea ‘No Tolerance’ policy,” FinCEN wrote in a notice of proposed rulemaking.

Global Bank Pullback

As global banks have cut international services amid tighter regulations, steeper fines and declining profitability, Latvian banks as a group have seen access to the U.S. dollar tighten. JPMorgan Chase and Co. ceased offering dollar-clearing services in 2013 and Deutsche Bank stopped dealing with Latvian lenders last year. As a result, banks like ABLV have had to rely on other institutions that have accounts with New York-based lenders to transfer U.S. dollars.

Latvia’s banking regulator has also imposed tighter rules, record fines and annual checks for those working with foreign clients as part of an effort to shake off a reputation that the country’s institutions hold wealth with questionable origins.

The tighter dollar-clearing services have coincided with a series of money-laundering allegations. The Latvian regulator fined three banks a total of 5.5 million euros ($6.8 million) for handling accounts that were involved in a $1 billion Moldovan fraud in 2014, equivalent to about an eighth of that nation’s economic output at the time.

Five Latvian banks agreed last year to fines totaling 3.5 million euros for failing to perform adequate due diligence and gather sufficient information on transactions and beneficiaries of deals linked to North Korea.

ABLV, like the rest of the bank sector that primarily serves foreigners, has lost deposits due to the stricter enforcement regime.

The Latvian lender opened a subsidiary in Luxembourg in 2012, and ABLV Advisory Services opened an office in the U.S. in 2016. It also has representative offices in Moscow, St. Petersburg, Russia; Kiev, Ukraine; Odessa, Ukraine; central Asia, and Hong Kong.

Bitcoin money laundering report ignores gambling’s history

A new report claims online gambling sites are prime conduits for laundering ill-gotten Bitcoin cryptocurrency proceeds, but its authors either chose to ignore or remain ignorant of gambling’s role in Bitcoin’s rise.

Last week saw the release of a report titled Bitcoin Laundering: An Analysis of Illicit Flows into Digital Currency Services. The report was issued by the Center on Sanctions and Illicit Finance (CSIF), an offshoot of the Foundation for Defense of Democracies (FDD), a Washington-based neoconservative think-tank.

The CSIF enlisted the help of cryptocurrency analytics provider Elliptic to study “illicit inflows” of Bitcoin to “conversion services,” basically any mechanism that allows users to convert Bitcoin into fiat currency.

The study examined the movement of Bitcoin derived from “clearly identified illicit activity,” which the study primarily defines as any Bitcoin moving off ‘darknet’ marketplaces, including the now-defunct Silk Road, as well as Bitcoin derived via fraud activity, ransomware and Ponzi schemes.

Before we go any further, it’s worth quoting the report’s finding that “the total percentage of identified ‘dirty bitcoins’ going into conversion services was relatively small. Only 0.61 percent of the money entering conversion services during the four years analyzed were verifiably from illicit sources.”

The study, which covered Bitcoin transactions during the years 2013 to 2016, also noted that there’d been “an across the board decline in the proportion of illicit transactions” during 2016.

The authors speculated that this decline is likely due to Bitcoin’s increasing popularity as a speculative investment, plus better anti-money-laundering compliance by conversion services. For example, illicit entities accounted for 3.6% of gambling sites’ incoming transaction volume in 2015, but this fell to just 0.57% in 2016.

Bitcoin exchanges accounted for 45.4% of laundered Bitcoins, while gambling sites ranked second with 25.8% and ‘mixers’ – anonymous online software services that swap bitcoins with different transaction histories – placed third with 23.4%.

The study refers to mixers and gambling sites as processing “far and away the highest proportion of dirty bitcoins,” while justifying the significantly higher percentage of illicit transactions at cryptocurrency exchanges due to their handling “much higher volumes” of overall crypto transactions.

The study’s authors fail to take into account that the online gambling sector was largely responsible for Bitcoin’s early development. As early adopters, gambling sites handled a disproportionately large volume of Bitcoin transactions in the years covered in the CSIF study, and thus would be similarly overrepresented in illicit transaction volume.

Moreover, the study notes that “97% of all illicit volume” via gambling and mixers “is being laundered through just three mixing or gambling services.” These same three services “account for almost half of all Bitcoin laundering.” European conversion services were particularly prone to handling illicit transactions.

So, a few bad apples, whose illicit transaction volume is on the wane, are used to discredit an entire industry, without whose early faith in cryptocurrency technology the Bitcoin revolution may not have succeeded.

The study’s authors also appear intent on creating a pejorative impression of a symbiotic association between gambling and darknet sites. The latter’s association with hard drug sales and murder-for-hire schemes couldn’t be further removed from gambling, a legal and popular form of entertainment enjoyed across the globe. Any attempt to create such an association in readers’ minds suggests an alternative agenda.

It’s worth noting that the FDD’s major donor list includes Las Vegas Sands supremo Sheldon Adelson, whose antipathy towards online gambling is no secret. Adelson has funded plenty of online gambling misinformation in the past and vowed to spend whatever it takes to ensure its demise. Caveat lector,

Treasury Eyes Cryptocurrencies For Money Laundering

The U.S. Treasury’s financial crime unit is picking up enforcement of cryptocurrency platformsthat don’t have strong internal mechanisms in place to prevent money laundering, according to a report in Reuters.

Sigal Mandelker, the U.S. Treasury Department’s undersecretary for terrorism and financial intelligence, told the Senate Banking Committee that the unit will go after virtual currency platforms – even those located outside of the U.S. – if they don’t have the proper safeguards in place. The cryptocurrency platforms in the U.S. must comply with the anti-money launderingrules on the books, including the requirement to file reports about suspicious activity. The report noted that roughly 100 platforms have registered with the Financial Crimes Enforcement Network.

“The real vulnerability that we all have to address is that while we have regulatory authorities in place here in the United States and we do enforce those … we need other countries to do the same,” Mandelker said. He noted that the U.S. government will also urge other countries to implement more regulation of cryptocurrencies.

In the summer, the Treasury went after the BTC-e bitcoin exchange, the Russian cryptocurrency platform, and fined it $100 million for allegedly participating in illicit practices that included computer hacking, ransomware and drug trafficking.

The U.S. isn’t the only country looking to crack down on the cryptocurrency market. Bitcoindropped 14 percent on Tuesday (Jan. 16), hitting its lowest point in a month and trading at below $12,000 a unit, as concerns emerge that a regulatory crackdown is imminent in several nations worldwide.

South Korea, which has been a bit back-and-forth on the issue, announced last week (via the Justice Ministry) that it would be banning bitcoin exchanges before announcing (via the Blue House) that it actually would not be banning bitcoin after all. The uncertainty continued this week, when South Korea further “clarified” that the nation is not banning bitcoin now, but could ban cryptocurrency trading in the future.