Money Laundering on Bit coin

This study explores the issue of money laundering on Bit coin and its impact on the Australian economy. It discusses the use of crypto currency in funding terrorism and cybercrimes, and the measures taken by the government to regulate the crypto currency market.

Running head: Money Laundering on Bit coin
MONEY LAUNDERING ON BIT COIN
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Money Laundering on Bit coin
Table of Contents
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................6
Bibliography....................................................................................................................................7

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Money Laundering on Bit coin
Introduction
Currently the Australian economy is considering the crypto currency market specially Bit
coin under the strict scanning of financial officials aiming to minimize the money laundering,
terrorism funding and cybercrimes. The decision that has been taken by financial sector of
Australian economy one month after AUSTRAC filled a case against commonwealth bank in
charge of money laundering. After the implementation of AML/CTF Act, all the financial
entities of the economy need to collect information regarding customer identity, monitoring
transactions and they need to submit report to AUSTRAC. The study is important because
through the money laundering done using Bit coin is actually increasing the rate of cybercrimes.
Discussion
The situation of money laundering in the Australian economy is the main concern for the
financial institutions of the economy and has been discussed in details.
Brief information
In the economy of Australia, the crypto currency market is growing significantly in the
sense that most of the terrorism activities are being funded by crypto currency. It is evident that
the ransom ware attacks that are launched by the cyber criminals prefer being paid in Crypto
currency so that tracking of them can be avoided. Ransome ware victims are forced to exchange
the fiat currency to Bit coin and they are required to transfer the amount into Bit coin and are
required to send them to a particular bit coin address provided by criminals for services like
drugs, weapons and DDoS attacks. Two important component of bit coin laundering are bit coin
mixers and bit coin exchanges. Through the introduction of Bit Coin mixing, the criminal are
aiming to disassociate bit coins from criminal sources. On the other hand, bit coin exchange
service transfers the bit coins to spendable money.

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Money Laundering on Bit coin
Figure 1: Price performance of Bit coin Vs Ripple VS Ethereum since 16/8/2017
(Source: Crypto currencies now fall under AUSTRAC money-laundering scrutiny, 2018)
The above diagram is showing that the price of two popular crypto currencies like Bit
coin and Ripple are falling since 2017. The value of Bit coin decreased by 60% and new entrant
in the market Ethereum has lost its value more. Changes that have been made in money
laundering laws felt requirement to establish the development of Digital Currency Exchanges or
DEC (Bogle, 2019). This is important in the sense that most of the people those who are
indulged in doing trade with crypto currency will have to register their currencies with Australian
Transaction Reports and Analysis Centre (AUSTRAC). This registration process will include the
detailed checking of the background of the individual and it will also highlight if the individual is
involved in some crimes or money laundering before. In 2017, the Crypto currency market has
witnessed a boom as the value of the Bit coin reached the height of US$ 79,783. In 2018, the
Australian Competitors report received 6000 complaint reports and the overall loss is around is
$9.5 million (Bogle, 2019).

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Money Laundering on Bit coin
Money laundering, bit coin and underground markets
Money laundering is mainly associated with the luxurious items and off-shoring products
like house, boats and many more like that. About 40% of payments among the cyber criminals
are done through Bit coins. Underground market is one of the best places to use the crypto
currency. The Bit coin block chain operates as decentralised banks for the market of crypto
currency. In spite of being so open, the bit coin system is anonymous as the block chain
addresses are not registered to any individual. On the other hand, using the crypto currency is
associated with the transactions that are linked with illegal activities. Bit coin mixer provides
customer with a newly generated bit coin address to make deposit.
Figure 1: Bit coin transactions
(Source: van Wegberg, Oerlemans & van Deventer, 2018)

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Money Laundering on Bit coin
Significant case study
The arrest of the Australian couple due to fraudulent activities and laundering of money
and the total valuation of the money laundering was around US$ 216, 450 using crypto currency.
Investigations on the online transactions by the Strike Force Break bank on the issues of stolen
credit cards have led to the arrest of these couples. The main agenda of these couples were to
steal the credit cards so that they can open 45 companies and bank accounts to deposit money
that has been collected from the fraudulent business. They used the collected money in
purchasing the crypto currency and they started the money laundering. The total amount of
money in the crypto currency is about AU$300,000 or US$216,450 (Australian couple arrested
for identity fraud and crypto money laundering, 2018). According to the investigation done by
FCA, investors faced about $255 million investment through crypto currencies and bit coin.
Criminal compromise of the exchanges are coordinated largely by Lazarus Group which
is one of the professional hacking group that is helping the North Korean government in
identifying the presence of dirty money within the economy and the close of silk route was not
enough to curtail the growing market of the crypto currency. The prevalence of eBay of vice is
more prone to the development of illegal activities within this part of Australia (Australian anti-
money laundering agency suspends two crypto exchanges, 2019). The illegal activities in the
form of drug dealers, gun peddlers and illegal document makers are expanding their business. In
order to increase the monetary performance of the country, the joint role played by government
and AUSTRAC will allow the economy to indulge the development of strict monitoring of the
economy. The government of Australia enacted new law regarding the money laundering. If any
dealer in the bit coins fails to comply with the registration process then the government may
enact a two-year of jail and fine of $105,000. However, for the big corporations doing big

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Money Laundering on Bit coin
mistakes will have to face big consequences. This is going to increase the resource distribution
that will help the government to bring effective policies.
Actions taken by government
Government of Australia is very serious regarding the development of better monetary
policy to minimise the risk that is associated with the crypto currency market. It has been seen
that due to incorporation of this crypto currency, most of illegal actions are developing within the
economy. Through the development of the policies, it will be important for the government to
minimise the resource gaps and they are taking every possible actions to indulge the
development of resources (Australian anti-money laundering agency suspends two crypto
exchanges, 2019). It is highly important for the government to increase the functionality of
AUSTRAC so that they can identify the customers and traders identity. This is important in the
sense that through the development of the monetary policy will allow the incorporation of better
improvement. Maintaining a record of transactions will allow the economy to help in the
government to identify the gaps in the investment (Campbell-Verduyn, 2018). Through the
improvement in the financial resource development strategies, it will be easy for Financial
Action Task Force (FATF) to improve the quality of actions against money laundering
(Pressreader.com, 2019). Under Australian legislation, one can easily pay million in cash for the
precious stones and for doing legal trades without giving their identity or the source of their
funds. On the other hand, allegations rose against CBA as they failed to provide 53,000 reports
to AUSTRAC and it is asking questions regarding the efficiency level. Through the improvement
in the mechanism of the financial monitoring will definitely allow the economy to improve the
investment level so that the Australian GDP can increase. On the other hand, due to this strong
regulations will definitely force the economy to indulge the smooth movement.

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Money Laundering on Bit coin
Conclusion
The study is concluding the fact that due to increased level of money laundering is going
to hamper the production of the economy. Improvement in the monitoring policy will determine
the development of the resource development that will not only increase the performances of the
economy but will also minimise the gaps in the investments that is mainly leading for the
development of money laundering. Through the improvement in the resource, utilisation and
monitoring problem will give rise to the development of better technology. Arrest of the couples
regarding money laundering is going to increase the strict monitoring of the government.

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Money Laundering on Bit coin
Bibliography
Australian anti-money laundering agency suspends two crypto exchanges | Learn CFDs.
(2019). Learn CFDs. Retrieved 2 May 2019, from https://www.learncfds.com/australian-
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Australian couple arrested for identity fraud and crypto money laundering.
(2018). Chepicap.com. Retrieved 2 May 2019, from
https://www.chepicap.com/en/news/3990/australian-couple-arrested-for-identity-fraud-
and-money-laundering-using-crypto.html
Australian money-laundering watchdog moves to regulate bitcoin.... (2019). IN. Retrieved 2 May
2019, from https://in.reuters.com/article/us-crypto-currencies-australia-regulatio/
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Bogle, A. (2019). Cryptocurrency looks for respectability as more than 200 exchanges
registered. ABC News. Retrieved 2 May 2019, from
https://www.abc.net.au/news/science/2019-02-01/digital-currency-exchanges-bitcoin-
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Campbell-Verduyn, M. (2018). Bitcoin, crypto-coins, and global anti-money laundering
governance. Crime, Law and Social Change, 1-23.
Cryptocurrencies now fall under AUSTRAC money-laundering scrutiny. (2018). ABC News.
Retrieved 2 May 2019, from https://www.abc.net.au/news/2018-04-11/cryptocurrencies-
subject-to-anti-money-laundering-and-terrorism/9640642

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Money Laundering on Bit coin
New AML Rules for Australia's Bitcoin Exchanges Kick In Today - CoinDesk. (2018).
CoinDesk. Retrieved 2 May 2019, from https://www.coindesk.com/new-aml-rules-
australias-bitcoin-exchanges-kick-today
New Australian laws to regulate cryptocurrency providers | Australian Transaction Reports and
Analysis Centre (AUSTRAC). (2019). Austrac.gov.au. Retrieved 2 May 2019, from
http://www.austrac.gov.au/media/media-releases/new-australian-laws-regulate-
cryptocurrency-providers
PressReader.com - Your favorite newspapers and magazines.. (2019). Pressreader.com.
Retrieved 2 May 2019, from https://www.pressreader.com/@%E2%9A%B
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Defence Lawyers. Retrieved 2 May 2019, from https://ngm.com.au/bitcoin/regulating-
bitcoin-in-australia-bill-2017/
Regulation of Cryptocurrency. (2019). Loc.gov. Retrieved 2 May 2019, from
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van Wegberg, R., Oerlemans, J. J., & van Deventer, O. (2018). Bitcoin money laundering: mixed
results? An explorative study on money laundering of cybercrime proceeds using
bitcoin. Journal of Financial Crime, 25(2), 419-435.