The United Kingdom National Crime Agency (NCA) said last week it disrupted Russian money laundering operations involving cryptocurrencies.
The operation so far led to 84 arrests and the seizure of over $25.5 million (£20 million) in cash and cryptocurrency, according to a recent NCA announcement. The investigation led to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announcing sanctions against Russian-speaking people and four businesses involved in the sanction-evasion networks.
The “Operation Destabilise” was not limited to the UK and included actions taken in the Middle East, Russia, and South America. Byron Boston, a former United States Dallas police officer, CEO at crypto tracking firm Crypto Track, told Decrypt that “the global nature of cryptocurrencies often places investigations at the mercy of inconsistent international regulation and cooperation.”
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In one example, Byron assisted the United States Department of Homeland Security investigating $1 million of crypto being laundered. The agents “were able to immediately identify the international exchange” but the exchange “requested a mutual legal assistant treaty” to release the relevant data.
This kind of red tape is often detrimental to fund recovery. Byron mentioned that “unfortunately, this is not a quick process and oftentimes the cryptocurrency is liquidated prior to obtaining the MLAT.”
The announcement did not specify how heavily the two money laundering networks uncovered—Smart and TGR—relied on cryptocurrencies for their operations. Still, the announcement explains that after the operators collected funds in one country, they often used cryptocurrency for cash transactions to move them to another.
Slava Demchuk, CEO at crypto compliance and forensics firm AMLBot, told Decrypt that “by using [over-the-counter (OTC) trading desks] in various jurisdictions, the criminals can hop on and off to and from cash to obfuscate on-chain trace.” This can be prevented by "fast information sharing with the complaint OTC” and quick sanctioning.
The UK was apparently a hub for such operations, with investigators noticing exchanges taking place at scale across the country “where street-level cash handovers were followed almost immediately by a movement of cryptocurrency of the same value.” Criminal groups reportedly used the cryptocurrency “to reinvest in their illicit business, buying more drugs or firearms without the need to move any physical money across borders.”
Edited by Stacy Elliott.