Digital Fiat Currency

Illicit cash or fiat funds enter the exchange through wire transfers or physical deposits attributed to mule-controlled accounts. Once inside, these funds are commingled with legitimate transactions, effectively masking their illegal origin. Repeated deposits, trades, and withdrawals in fiat form make it more challenging for authorities to detect the layering activity.

Criminals exploit money remittance channels to split illicit fiat funds into multiple low-value transfers under false or multiple identities. These small amounts typically fall below formal reporting thresholds, enabling the layering of dirty money with minimal scrutiny. By directing numerous small transfers toward a single beneficiary, they obscure the true origin of the funds, masking illicit revenue flows within legitimate fiat currency transactions.

• Ultimately, criminals liquidate in-game currencies or digital items to obtain real-world money.
• Unregulated or foreign-based services may deposit those proceeds as if they were legitimate gamer earnings, masking the illicit source.
• This reintroduction of laundered funds into traditional banking channels completes the layering cycle.

• Criminals funnel illicit fiat payments to remote mining providers under the guise of legitimate hosting or equipment fees, masking the true source of funds.
• These cross-border transactions leverage providers with weak AML protocols, allowing the illicit proceeds to be layered into routine business payments and obscuring their criminal origin.

• Criminals deposit or withdraw illicit funds in traditional government-issued currencies via instant exchange services offering near-immediate conversion into cryptocurrency or vice versa.
• Each quick conversion from fiat to crypto helps obscure the origin of funds, forming additional layering steps.
• Minimal KYC or anonymous transactions on these platforms enable repeated cross-currency conversions before authorities can detect suspicious activity.

• False or manipulated court rulings typically mandate payments in recognized fiat currency. Once labeled as 'court-ordered' damages or compensation, the fiat transfers are treated as legitimate receipts rather than suspicious inflows.
• The official legal endorsement masks the illicit nature of these funds, enabling straightforward integration into both personal and business financial channels.

• Criminals ultimately convert layered in-game or virtual-world assets into fiat currency through exchanges with weak KYC, making it difficult to trace the funds' illicit origin.
• Presenting proceeds as legitimate gaming earnings or NFT sale revenue further obscures investigative trails once the money enters traditional banking channels.
• The final step of depositing fiat into standard bank accounts creates an appearance of conventional transactions unrelated to the underlying game-based laundering activity.

• After reselling metaverse-based assets and converting the proceeds into recognized cryptocurrencies, launderers ultimately exchange those tokens for fiat currency (e.g., USD, EUR) to integrate funds into standard financial systems.
• Once the illicitly obtained tokens have been ‘washed’ through multiple digital asset trades, selling them for fiat masks their criminal origins under the appearance of routine cryptocurrency-to-cash transactions.
• These cash-outs often occur via centralized exchanges or OTC brokers in different jurisdictions, further complicating oversight by financial institutions.

• Complicit MSBs specialize in currency exchange, enabling criminals to convert proceeds from one currency to another without triggering alerts.
• By neglecting suspicious activity reporting, the MSB blends illicit sums with normal exchange transactions, complicating tracing efforts by authorities.

• Criminals repeatedly convert one fiat currency into another at exchange offices, fragmenting transaction records and making the original source of funds harder to identify.
• By rotating through diverse currencies across multiple jurisdictions, launderers exploit weak controls or collusion in certain exchange offices to create numerous low-visibility transactions.

• Criminals place illicit proceeds into traditional bank or MSB channels and perform multiple FX conversions (e.g., USD to EUR, EUR to GBP) under the guise of legitimate business or hedging.
• They maintain accounts denominated in different currencies, orchestrating frequent cross-currency transfers that obscure the origin of funds.
• Splitting transactions below reporting thresholds across multiple providers or jurisdictions further conceals the layering scheme from regulators.

• Multi-Currency Swap involves converting illicit funds among various fiat currencies (USD, EUR, JPY, etc.) to break the transaction trail.
• Criminals exploit differential regulations or weaker AML enforcement in certain locations to repeatedly exchange one fiat currency for another.
• Each conversion further obscures the origin of funds, complicating efforts by investigators to track transactions through multiple denominations and jurisdictions.

• Criminals direct victims to deposit tangible funds (e.g., wire transfers, cash, or other bank-based payments) into fraudulent trading accounts or Bitcoin ATMs controlled by the scammers.
• This straightforward channel facilitates the initial placement of victim money into the scam ecosystem before quickly converting it into cryptocurrency, making it more difficult for authorities to recover the stolen capital.

Once a critical mass is reached, criminals convert illicitly mined cryptocurrency into fiat currency on exchanges—including those with lax AML controls or via informal OTC brokers. This step integrates the proceeds into traditional financial channels and enables subsequent movement into conventional banking with reduced suspicion.