Cash Still Dominates Criminal Activity Despite Crypto’s Transparency, Report Says

A new report from Homeland Security Investigations highlights that cash remains the primary tool for criminals, while blockchain technology used in cryptocurrencies aids law enforcement efforts. The report emphasizes that only a tiny fraction of crypto transactions are linked to illicit activities.
In the ongoing debate over illicit finance, cryptocurrency often bears the brunt of criticism. However, a new report published by Homeland Security Investigations (HSI) Supervisory Special Agent Robert Whitaker and the Crypto ISAC reveals that cash, not crypto, remains the preferred tool for criminals.

The report underscores the transparency of blockchain technology, which is increasingly being used by law enforcement to combat crime, track illicit transactions, and enhance national security. This capability, often misunderstood by the general public, gives crypto platforms an advantage in preventing and identifying illegal activities.

Cash Remains the Top Choice for Criminals

According to the report, despite concerns, the actual share of illicit cryptocurrency transactions is minimal. Analysis by Merkle Science shows that between July 2021 and June 2024, only 0.61% of USDT transactions were flagged as potentially illicit, while USDC had an even lower rate of 0.22%. In comparison, the use of cash in criminal activities remains rampant, especially in drug trafficking, due to its anonymity and lack of a paper trail.

Additionally, Chainalysis reported that illicit activities accounted for just 0.34% of total crypto transactions in 2023, down from 0.42% in 2022. These figures are significantly lower than the estimates of illicit activities in traditional finance (TradFi), as highlighted in the Treasury’s 2024 National Money Laundering Risk Assessment.

Blockchain vs. Traditional Finance

One of the key differences between cryptocurrency and traditional finance is transparency. In traditional finance, law enforcement agencies must obtain financial records from institutions, a process that often involves a grand jury subpoena and significant evidence before any tracing can begin. On the other hand, blockchain technology enables authorities to trace transactions in real-time across borders, offering an unparalleled tool in tracking illicit activities.

Moreover, many criminals still rely heavily on cash due to its untraceable nature. A 2024 DEA report confirms that cash is the primary method used in drug trade transactions because it provides anonymity and lacks digital or paper trails.

KYT: A Game-Changer for Law Enforcement

The report highlights the importance of “Know Your Transaction” (KYT) tools in the fight against cash-based illicit crimes like money laundering and terrorist financing. KYT leverages blockchain’s transparency, allowing real-time tracking and risk assessment of transactions. This provides law enforcement and regulatory bodies with a powerful tool to “follow the money” more effectively than traditional Know Your Customer (KYC) processes used in conventional finance.

By integrating KYT with existing compliance systems, exchanges can continuously update risk assessment frameworks, staying ahead of emerging threats. Additionally, KYT helps with sanctions compliance, enabling exchanges to screen and block transactions linked to high-risk addresses identified by bodies like the Office of Foreign Assets Control (OFAC).

Conclusion

While crypto may attract attention due to its role in some illicit activities, the data paints a different picture. Cash remains the criminals’ tool of choice, and blockchain’s transparency offers a significant advantage for law enforcement agencies. By continuing to develop compliance tools like KYT, crypto platforms can enhance security and prevent illicit financial activities more effectively than traditional finance.

Our creator. creates amazing NFT collections! 
Support the editors - Bitcoin_Man (ETH) / Bitcoin_Man (TON)

Pi Network (Guide)is a new digital currency developed by Stanford PhDs with over 55 million participants worldwide. To get your Pi, follow this link https://minepi.com/Tsybko and use my username (Tsybko) as the invite code.

Binance: Use this link to sign up and get $100 free and 10% off your first months Binance Futures fees (Terms and Conditions).

Bitget: Use this link Use the Rewards Center and win up to 5027 USDT!(Review)

Bybit: Use this link (all possible discounts on commissions and bonuses up to $30,030 included) If you register through the application, then at the time of registration simply enter in the reference: WB8XZ4 - (manual)