The Dutch government is trying to make it easier to launch a criminal investigation against persons who use bitcoin to launder money from illegal activities, according to Financieele Dagblad, a Dutch newspaper.
Dutch investigators have discovered criminals are shielding activities using “bitcoin mixers.” A bitcoin mixer is a grab bag with bitcoins of several owners. The bitcoins paid out from the bitcoin mixer cannot be traced back to the original owner.
Bitcoin And Money Laundering
The FIOD, the investigative arm of the Dutch tax authority, wishes to have the bitcoin mixers recognized as money laundering. By recognizing this activity as money laundering, investigators can take action against a suspect without having to demonstrate a reasonable suspicion of a crime.
Rolf Van Wegberg, of the knowledge institute TNO, which is investigating money laundering through bitcoin, said he researched a handful of bitcoin mixers, with names like Onion Wallet and BitcoinBoost. He said the mixers are reviewed on the darknet by users.
Van Wegberg found that at low-rated mixers, his money was lost. On highly-rated mixers, he received his bitcoins back and was able to convert them into euros and send them to online payment services like PayPal and Western Union.
Laundering costs often exceed 40%, but with the bitcoin mixer, it was only about 15%.
A Different Criminal Standard
The use of the mixer alone will be sufficient to launch a case against a trader. A criminal can be prosecuted for money laundering more easily than for conducting a criminal transaction in which bitcoins are earned.
Van Wegberg said there can be legitimate reasons for using a mixer. If you are a foreign journalist in Myanmar getting your salary from a foreign medium, the mixer will hide the fact that the money is coming from a foreign media company.
The FIOD has been able to identify darknet criminal traffickers and parties that exchange bitcoin for euros.
In one case, a 24-year-old from Amsterdam and a 27-year-old from Utrecht were arrested on suspicion of drug trafficking and money laundering and participating in a criminal enterprise.
A second case concerns four Dutch nationals suspected of swapping bitcoins for euros after obtaining bitcoins from illegal activity. The men fled to Malta in 2015 when banks became suspicious of their activities.
Also read: Report: Netherlands dominates darknet trade
International Money Laundering
The third case concerns an international investigation of a money laundering gang that used bitcoins. In January 2015, Dutch prosecutors announced the arrest of 10 men suspected of using bitcoin to launder up to 20 million euros. It was reported that the suspects were seen as facilitators to drug dealers operating on the Dark Web laundering bitcoins.
Traders from this gang used “cashers,” parties that exchange bitcoins for euros.
Image from Shutterstock.
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