Illicit proceeds (also known as dirty money) are the profits from illegal activities such as bribery, fraud and the sale of drugs or weapons. It is illegal to launder these funds through traditional banking systems, so criminals often turn to cryptocurrency markets in order to hide their identity and transfer large sums of money without detection.
Cryptocurrency users have a responsibility to help prevent criminal activity by being aware of how illicit proceeds could enter their digital wallets. Here are a few tips:
•Be suspicious of transactions that seem too good to be true. If something appears too good or seems fishy, do your research before engaging with it further.
•Look out for red flags when trading on exchanges – watch out for accounts that appear new but have unusually high trading volumes or sudden spikes in prices that cannot be explained rationally; this may indicate someone trying to move ill-gotten gains quickly before they can be detected or traced back.
•Monitor your wallet’s incoming and outgoing transactions regularly – if you see any suspicious activity, report it immediately! You should also keep an eye on any unverified addresses sending funds directly into your wallet; this could signal an attempt at laundering illicit proceeds through your account.
In addition, many countries around the world have implemented anti-money laundering laws which require businesses dealing with cryptocurrencies to verify customer identities and monitor transaction flows for evidence of criminal activity. This means that cryptocurrency exchanges will need certain information about you — such as full name, address and other personal details — in order for you open an account and make trades on their platform. Make sure you understand what type of data is needed before signing up with any exchange service provider!
