US FinCEN Issues Warning on Bitcoin, Ethereum, Monero, Tether Usage in Drug Trade

• The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has raised alarms about the growing use of various cryptocurrencies to support Mexican drug trafficking operations.
• FinCEN issued updated guidance to US financial institutions, warning them about the involvement of specific cryptocurrencies in illegal fentanyl trafficking.
• Four primary tokens were mentioned in the advisory: Bitcoin, Ethereum, Monero, and Tether.

This detailed article explores the latest warnings from FinCEN regarding the use of cryptocurrencies in illegal activities, providing insights into the current state of crypto-related crimes.

FinCEN Highlights Cryptocurrency Use in Drug Payments

FinCEN has identified that criminal organizations in Mexico are increasingly purchasing raw materials needed to produce fentanyl using notable digital assets such as Bitcoin and Ethereum. This advisory aims to raise awareness among US financial institutions about the transactions that support the production of dangerous drugs.

Cryptocurrency Transactions in Drug Trafficking

According to FinCEN, Mexican drug cartels are procuring fentanyl precursor chemicals and manufacturing equipment primarily from suppliers based in China, with payments often finalized using cryptocurrencies. The updated FinCEN guidance reflects issues previously surfaced in sanctions and criminal cases by US authorities. The advisory details how these funds typically end up in digital wallets hosted by Chinese cryptocurrency firms, sometimes routed through intermediary money transmitters.

UK’s FCA Arrests Two Linked to £1 Billion Illegal Crypto Operation

The UK’s Financial Conduct Authority (FCA), in collaboration with London police, has arrested two individuals suspected of running an unregistered crypto business involving over £1 billion in crypto assets. This operation saw searches at multiple offices and residences in London, resulting in the seizure of several digital devices. The investigation is ongoing, with the FCA refraining from disclosing further details at this time.

Regulatory Impact and Enforcement in the UK

As of January 2021, crypto asset services in the UK are required to register with the FCA. However, only 44 companies have complied with this requirement. The FCA possesses the authority to seize and freeze crypto and related assets during investigations. The FCA’s enforcement director emphasized the importance of keeping illicit funds out of the financial system, highlighting the FCA’s commitment to curbing illegal activities in the crypto sector.

Conclusion

Recent advisories from FinCEN and actions by the FCA underscore the increasing attention regulatory bodies are paying to the misuse of cryptocurrencies in illegal activities. These measures aim to enhance the scrutiny and control of digital asset transactions, offering a glimpse into future regulatory trends. Stakeholders in the financial and crypto sectors need to stay vigilant and comply with evolving legal frameworks to mitigate the risks of involvement in unlawful operations.