Deutsche Bank, the largest banking institution in Germany experienced a raid in their Frankfurt headquarters based on money laundering suspicion by the local law enforcement agencies. The press has constantly targeted cryptocurrency over its supposed use by criminals in their operations, and now banks are being subjected to investigations in their numbers over being used by criminal organizations to make payments.
On 29th November, a report by BBC was released concerning a well-publicized investigation into the Deutsche Bank carried out by German law enforcement agencies whereby the files and servers belonging to the banking institution were obtained for the purpose of finding out if the bank was involved in any way with the criminal activities ongoing in the British Virginia islands by processing 350 million dollars for clients linked to the criminal activities.
The Number Inaccuracies
A money laundering report was issued by Wall Street Journal against ShapeShift in September, stating that ShapeShift helped in the laundering of $9 million originating from criminal operations. ShapeShift happens to be a popular platform for crypto trading located in Switzerland. Wall Street Journal further disclosed that at the time, information regarding the illicit funds was obtained from Bitcoin and Ethereum’s public blockchains.
Reacting to this, ShapeShift expressed the following:
“$9m (even if it was true) is 0.15% of ShapeShift’s exchange volume during the described time period. We have a strong record of complying with law-enforcement requests, providing valuable assistance in over 30 investigations in 13 different countries all over the world. We work with other exchanges on an almost-daily basis to identify and block thieves and criminals, through a self-policing group ShapeShift created to protect the users and industry. We block entire countries on the sanctions lists. We have an internal anti-money laundering program that uses blockchain forensics.”
It is more dangerous for criminals to make use of cryptocurrencies in their activities because dissimilar to fiat transactions, cryptocurrency transactions originating from certain wallets can be easily traced to the exchanges it came from, and companies such as Chainalytics and explorers of public blockchain network makes it possible.
For example, when an ICO exit scam was about to be committed by PureBit in South Korea, by disappearing with the funds provided by investors amounting to millions of dollars, Upbit, the biggest crypto exchange in South Korea, shut down the accounts operated by the scammers and made the funds inaccessible immediately it was transferred to Upbit.
From the Deutsche Bank scandal to another high profile $227 billion scandal linked to the Belgian Bank called Danske, it can be observed that criminals prefer to use traditional banking systems to process money, notwithstanding the rigid regulations instituted. The legacy banking institutions have proven to be ineffective in fighting against money laundering.
A lot of highly ranked cryptocurrency exchanges such as Binance have joined hands with companies like Elliptic and Chainalytics, and also, many cryptocurrencies have made their addresses available to blockchain-based analytics companies, to put an end to money laundering.
When these shocking events are compared, like the ShapeShift’s alleged $9 million case, the $350 million Deutsche Bank scandal, the Danske Bank’s outrageous $227 billion scandal, and many more money laundering cases that have been reported in the past, it can be seen in varying degrees how criminals have abused the global financial sector.