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(NewsNation) — A DEA investigation into Mexican drug cartel money laundering operations found members allegedly utilized the cryptocurrency company Tether to complete illicit transactions, federal court documents said.
Tether is currently the third-largest cryptocurrency operation by market capitalization. More than $15.7 million in cryptocurrency was withdrawn during 452 transactions from a single account believed to be involved in the operation, government officials allege.
Investigators noted in the complaint that professional money launderers use a variety of methods to accomplish their goals, including trade-based money laundering, bulk currency smuggling, and virtual currency trading.
Cryptocurrency is generally defined as electronically sourced units of value that can be purchased with, sold for, or used as a substitute for currency that is regulated by government agencies, court documents stated.
Cartels use cryptocurrency to hide their cash flow
Robert Almonte, a former U.S. Marshal and deputy chief with the El Paso Police Department, told NewsNation that cartels have taken advantage of modern technology, including cryptocurrency, to enhance their criminal endeavors.
As appears to be the case with Tether, cartel members often hire professional cryptocurrency money launderers to move the money and then pay them a commission based on the total amount of cash they launder, Almonte said.
Once the money from the drug proceeds is moved around, it eventually ends up back in cartel hands to further finance their global operations, he added.
“It’s difficult to track the cryptocurrency and the exchange of the cryptocurrency,” Almonte said. “In many cases, these money launderers are moving it around several times before it reaches its final destination. So that’s one of the main reasons they are using cryptocurrency because it is so hard to detect.”
Why money laundering through crypto is hard to track
Almonte said that traditional methods of moving money back and forth between Mexico and countries like the U.S. and China often slow cartel business down and can be more easily traced. By using cryptocurrency, funds move at a faster pace, which can make the work of federal agents investigating cartels much more difficult.
The civil complaint states that cryptocurrency can be quickly transmitted between parties and across national borders. Many cryptocurrencies, including Tether, use what is called a “blockchain” which provides a ledger of every transaction that is conducted using the network.
The blockchain does not list the names of those involved in the transaction but lists the date and time of the transaction, which public addresses were accessed during the transaction, and how much cryptocurrency was exchanged, court documents show.
The complaint states that proceeds from the sale of narcotics are returned to drug traffickers within the “source countries” using various methods, including cryptocurrency.
As part of the operation, federal investigators said that drug traffickers contact professional money launderers who are responsible for collecting the currency within the consumer countries and deposit the money into the U.S. banking system.
Investigations like this can help spotlight the need for other firms to safeguard themselves against becoming an unknowing agent for the cartels, Almonte said.
“Whatever comes up with technology, be assured the cartels are going to tap into it,” he told NewsNation. “That’s going to get law enforcement not only to look into those types of companies, but look at them more often.”