Money laundering is the procedure through which criminals disguise ill-gotten gains as legal funds. Money laundering is a worldwide crime that entails the placement of funds in lawful financial systems via a number of routes in order to conceal the source of the funds and the illegal activities involved.
If the monies are linked to a series of illegal acts, law enforcement officials may readily identify and confiscate them. This is why thieves conceal the money and then cleverly inject it into a legitimate financial institution, rendering it untraceable.
Money laundering is a method used by criminals such as drug traffickers, terrorists, and hackers to conceal the source of their funds. Due to the concealed nature of laundered money, it is difficult to track, but AML software is used to identify suspect financial activity.
The global community invests about $2 trillion yearly in combating this crime. This post will discuss money laundering statistics in order to help you better comprehend this covert crime. Continue reading!
Astonishing Money Laundering Statistics
Laundering money is a crime that may lead to other crimes like funding terrorism and manipulating the market. Arguments abound on whether Cryptocurrency aids money laundering or not. The following startling statistics shed light on the general money laundering trends that you should note.
- Between $800 billion (2%) and $2 trillion (5%) of the world’s GDP is laundered worldwide in a year.
- 90 percent of the money laundered goes undetected. (Source: Forbes)
- Suspicious Activity Reports (SARs) lead to the blocking of about 31% of laundered Money annually.
- In 2019, the American State Department estimated that controlling money laundering succeeded by only 0.2 percent.
- 80 percent of the laundered 3.1 billion USD was seized from North America in 2009.
- 9500 of about 11500 financial non-banking companies registered were AML non-compliant by 2018.
- In 2019, AML noncompliant banks paid 6.2 billion USD fines globally.
- By 2025, the market worth of the software for curbing the laundering of money is expected to reach 2717 million USD from 879 million USD in 2017. (Source: Tookitaki)
Money laundering is a danger to not just the global economy, but also to national security. It jeopardizes financial institutions’ profitability because to the costs associated with combating the vice via higher anti-money laundering expenditures, such as the purchase of anti-money laundering software. Additionally, nations suffer additional costs in implementing anti-money laundering legislation. Financial institutions’ SARs assist authorities in intercepting money laundering.
Financial institutions and Money Laundering Statistics
Banks and other financial institutions are used by criminals to launder their ill-gotten gains. Banking institutions are preferred money laundering tools for criminals because they offer a variety of financial services, including foreign exchange, deposits, cash transfers, and loans.
Additionally, it is simple to utilize these institutions to move assets or cash to branches or other institutions located in other geographical areas with favorable or lenient money laundering laws.
The established global economy and interconnected money markets have made foreign money transfers simple, quick, and convenient. In certain nations, strict bank secrecy rules aid in concealing the source of illicit money, making it simpler for criminals to launder money.
1. From 2008 to 2017, financial institutions lost about $321 billion globally through fines for being non-compliant to standardized regulations, assuaging laundering of money, funding terrorism, and manipulating the market.
Banks suffered significant losses between 2008 and 2017 as a result of their failure to comply with laws designed to combat financial crime. Not only do the financial institutions in issue enable money laundering, but they also assist criminals in funding terrorists and manipulating the market in their advantage. Banks commit this offense by failing to follow AML transaction rules and by neglecting to provide appropriate authorities with SARs.
2. Financial institutions paid penalties worth $8.4 billion globally in 2019 compared to $4.27 billion in 2018 for breaching AML regulations.
(Source: Accountability Daily)
In 2019, the value of penalties paid by noncompliant AML institutions almost doubled that of fines paid in 2018. Additionally, the number of AML non-compliance fines doubled in 2019, from 29 in 2018 to 58 in 2019. This demonstrates an increase in financial institutions’ carelessness regarding the submission of SARs and the implementation of measures aimed at combating financial crime.
3. Of all the 2019 AML fines, the US served 25 penalties worth $2.29 billion compared to 12 penalties worth $388.4 million.
(Source: Accountability Daily)
American authorities were the best in the world in policing money laundering and other financial crimes, having imposed almost half of all global penalties, followed by the UK. France, on the other hand, faced the highest penalty, totaling $5.1 billion. The average fine in 2019 was 145.33 million dollars.
4. By the end of 2020, AML related fines and penalties rose to $10.4 billion globally.
(Source: Compliance Week)
Fines and penalties levied on financial institutions that violate anti-money laundering laws will have risen by $2 billion by the end of 2020. Over the period 2008 to 2020, banking institutions paid a total of 46.4 billion USD in AML-related penalties across the globe. This is an indicator of financial institutions’ failure to comply with anti-money-laundering (AML) laws. Inattention to detail such as this undermines the work of the relevant authorities to combat money laundering.
5. The Asia Pacific region issued a total of $5.1 billion while the US issued $4.3 billion in total fines in 2020.
(Source: Compliance Week)
In terms of AML fines issued in 2020, the Asia Pacific area was ahead of the United States. In third place was Malaysia, which received $3.9 billion in fines, followed by Australia, which received 921.5 million USD in fines, Sweden, which received 550 million USD, and the United Kingdom, which received 199 million USD in fines. Regulators from these nations performed the best in the world in 2020 when it came to implementing money-related criminal laws.
6. In January and February 2021 the Federal regulators served AML penalties above $200 million to AML non-compliant financial organizations.
(Source: Finance Feeds)
This pattern is indicative of a record rise in the fines levied against financial institutions for failing to comply with anti-money laundering rules and legislation. In addition, there has been an increase in the assessment of AML compliance among financial institutions, as well as the passage of the Bank Secrecy Act Obligations, which will likely result in a significant rise in the severity of penalties in 2021.
Cryptocurrency market growth
The cheap prices of purchasing bitcoin and the simplicity with which transactions may be completed, as well as advantageous exchange rates, interest rates, and transaction fees, are driving the development of the cryptocurrency industry. In addition, technological advancements have made blockchain technology feasible, which has resulted in a worldwide demand for cryptocurrencies. The data in this part will assist you in understanding the trends in the bitcoin market, which will assist you in understanding why criminals select this channel for the purpose of money laundering and other illegal activities.
7. By the end of 2025, the blockchain’s market will grow from $3 billion in 2020 to $39.7 billion.
The anticipated rise may be attributable to an increase in financing as well as a matching increase in investment in the blockchain technology. The growing use of blockchain technology in retail and supply chains will also contribute to this expansion. As a result, investors should begin learning how the cryptocurrency market operates in order to make profitable future purchases. During this time span, the company will have a cumulative yearly growth rate of 63.7 percent.
8. Tether traded 153.65 billion USD compared to Bitcoin’s 70.45 billion USD on 14th April 2021
As a consequence of the rise in the value of bitcoin in the years 2020 and 2021, it became more popular. However, it came in second place in terms of 24-hour trading volume, behind only the lesser-known Tether. The two virtual currencies were the only ones that traded for more than 100 billion dollars each. Other currencies that have followed suit include Ethereum and Ripple, which have a combined market capitalization of 31.56 billion USD and 30.78 billion USD.
9. The blockchain market is projected to attain a cumulative annual growth rate of 82% between the years 2021 and 2028.
(Source: Grand View Research)
Blockchain technology has a promising future ahead of it. It is anticipated to expand at a rapid pace year after year. The market was estimated to be valued $3.67 billion in 2020. Its growing market share is a consequence of its efficiency and the ease with which many parties may participate in a transaction. It also serves as a dependable universal repository for all transactions in which the parties concerned are engaged.
The increasing worldwide demand for bitcoin is also a contributing factor to the development of blockchain technology. Banks are also using blockchain technology to process payments and issue digital currencies all around the globe. In addition, it makes it feasible for banks to conduct low-cost, rapid international transfers, which was previously impossible under previous methods.
10. Of all the people who own cryptocurrency, 78.95 percent bought their coins while only 21.05 percent mined.
The vast majority of bitcoin investors have acquired their holdings via traditional means. This is the primary reason why bitcoin was owned by 61 percent of the individuals questioned by Urnabtaphouse, according to the study. As of November 2018, about 16 million Americans have made bitcoin investments. Bitcoin is one of the most popular digital currencies, accounting for 6 billion USD in daily transactions.
11. The total cryptocurrency market cap was 950 billion USD in 2021 compared to 302.7 billion USD in 2019.
(Source: Finance Magnates)
This is a threefold growth in the past three years, which is equal to an increase of more than 300 percent. The total market capitalization of all cryptocurrencies in 2021 is $647.2 billion, with bitcoin having the largest market capitalization followed by Ethereum with a market capitalization of $122.6 billion, Tether with a market capitalization of $24.2 billion, and Lite coin with a market capitalization of $9.2 billion.
12. People who use cryptocurrency globally are more than 40 million.
(Source: SaaS Scout)
A growing number of individuals across the world are dealing in cryptocurrencies, which is a rising market worldwide. It is anticipated that more individuals will join the cryptocurrency industry in the near future.
Cryptocurrency and Money Laundering
Taking advantage of technological advancements has made it simpler to make financial payments through electronic means. Criminals may utilize cryptocurrencies such as Bitcoin to hide their source money and covertly move money across international borders without arousing suspicion.
Cryptocurrencies are virtual means of trade whose transactions can be traced online due to the usage of blockchain wallet technology, which allows them to be monitored online. The extraordinary development of the cryptocurrency industry has presented unanticipated difficulties to most anti-money-laundering authorities across the globe. Countries such as the United States, China, Spain, Singapore, Japan, and Malaysia are in the forefront of the effort to regulate their own cryptocurrency marketplaces.
Regulations to prevent money laundering in the cryptocurrency market are still in the works, but the following figures provide some valuable insight into the fledgling industry.
13. Criminal cryptocurrency transactions in 2019 accounted for 21.4 billion USD compared to 10 billion USD in 2020
(Source: ETF trends)
In the year 2019, transactions associated with illegal activity accounted for 2.1 percent of all transactions completed that year. In the year 2020, there has been a significant reduction in illegal cryptocurrency operations, with 0.34 percent of all transactions completed in the year 2020 being illicit cryptocurrency activities.
14. Of the over 1 trillion USD 2019 cryptocurrency transactions only 1.1 percent was estimated to be illegitimate.
Considering that it is not feasible to transfer any quantity of money to bitcoin in an anonymous manner, the likelihood of cryptocurrency serving as a money laundering haven is very low. Because cryptocurrency transactions are conducted online and data can be readily accessed and analyzed, it is also simple to monitor the movement of cryptocurrencies.
15. Europol accused Bitcoin mixer of laundering 270 million USD equivalent to 27000 Bitcoin from May 2018 to May 2019.
The Bitcoin mixer owner was fined $60 million for breaching AML laws which included infracting bank secrecy act and offering money services using an unregistered business.
16. In 2019 criminals stole 4.5 billion USD compared to 1.9 billion stolen in 2020
The statistics above show a 57% decline in cryptocurrency theft from 4.5 billion USD to 1.9 billion USD. The decrease is associated with the improvement of the security systems by market participants.
17. In 2020 Bitcoins worth only 3.5 billion USD equivalent to less than one percent of all crypto transactions were linked to addresses tied to criminals
There was tight monitoring of Bitcoin transactions last year hence only a small number (less than 1% of all Bitcoin transactions) of criminals benefited from Bitcoin transactions.
18. The 2020 Chainalysis report reveals that only 270 block-chain addresses laundered 55% of all crypto that went to criminals.
This is a good development because if this trend continues money laundering will almost be non-existent in the crypto market. The few criminals will be easily tracked and dealt with by the relevant authorities.
19. 97 percent of ransomware fraudsters ask their targets to pay the ransom through Bitcoin.
Ransomware criminals prefer payment through cryptocurrency because it is easier to pay to an anonymous address that does not easily reveal their identity.
20. In 2020 criminals sent $3.5 Billion from their Addresses.
In the year 2020, bitcoin worth 3.5 billion USD was transferred from bitcoin addresses associated with criminals. Dark markets are controlled by criminals linked to these bitcoin addresses, while others engage in fraud, ransomware, and hacking activities. In order to launder the bitcoin supplied by these crooks, the cryptocurrency will be pumped into an exchange market, following which it will be converted into fiat money and deposited in banks. As a result of a thorough Know Your Customer (KYC) process, the funds were discovered and returned by the exchange in question.
21. 36.7 million USD was sent to criminals’ addresses by a US exchange in 2020.
A total of 36.7 million USD were transferred to addresses associated with illegal activity by the same exchange that received 3.5 billion USD. This transaction would not have been possible if there had been adequate anti-money laundering software in place. This is one of the reasons why exchanges should invest in appropriate anti-money-laundering technologies. Exchanges, on the other hand, may reveal dark market participants and other money-laundering offenders if they are protected by strict security measures.
The AML Software Market
Money laundering techniques are always evolving, and as a result, authorities must create strong laws to fight this evil. Because of the pressure applied by both criminals and anti-money-laundering regulatory agencies, anti-money-laundering software has become a need for all financial institutions. According to these data, the high demand for this software has resulted in a significant increase in the market’s size.
22. By 2025 the global market of AML software growth will be worth 2717 million USD.
The value of AML software was just $879 million in 2014, but it is expected to increase by more than 300 percent by 2025, according to forecasts. This rise is related to an increase in demand for anti-money-laundering software by financial institutions in order to more effectively identify money-laundering operations.
23. Between the years 2020 and 2025, the software market for AML is predicted to attain a CAGR of 14.12%.
Because of the increasing need for software across the world, this represents a trend of continuing expansion year after year. Many financial service companies would consider increasing their investment in anti-money laundering software in order to be AML compliant.
24. In 2019 the market for AML software share for North America was 36.4% of the world market.
North American dominated the AML software market in 2019 probably because regulators in that region were the best in dealing with financial crimes.
Money laundering has ramifications not just for the economy, but also for global security and the forces of the market. This is due to the fact that illicit money is used to finance criminal acts such as terrorism, as well as to manipulate the stock market and currency markets. Criminals launder a significant amount of money each year via the use of financial institutions that fail to adhere to anti-money laundering laws and guidelines.
These rules are enforced by regulators, who prosecute and sentence non-compliant financial institutions and people who violate them. After being found guilty, the prisoners are penalized significant amounts of money in order to deter them from assisting in the laundering of money in the future.
Cryptocurrencies and financial institutions both function as channels for illicit money laundering on the part of criminals. Similarly to financial institutions, criminals have used Bitcoin to launder billions of dollars in the United States since the cryptocurrency’s debut. All businesses that provide financial services should conform to the anti-money laundering rules and legislation that have been put in place by various nations to prevent the laundering of money.
Banks and other financial institutions may utilize Anti-Money Laundering Software to effectively identify and report any suspected illegal behavior to the appropriate authorities. The AML software industry is expanding at a rapid pace, and it is projected to continue to expand through 2025 at the current rate.
Factors contributing to the market growth of AML software include the development of more sophisticated techniques for money laundering, cybercrime and the introduction of large data analysis and storage solutions, the expansion of Know Your Customer (KYC) to verify user identities, and the enforcement of government regulations and legislation.
Drivers that propel the market growth of the AML software include; increased and sophisticated techniques used to launder money, cybercrimes, the advent of large data analyzing and storage solutions, the growth of KYC to verify user identities, and the enforcement of government regulations and laws
Q: What does the term Money Laundering mean?
Answer: Money laundering refers to the action of making money that is acquired by illegal means appear legitimate by channeling it through anonymous accounts that don’t reveal their owners’ identity. Illegal ways through which money is earned include selling drugs, funding terrorism, and fraud.
Q: What is cryptocurrency?
Answer: Cryptocurrencies refer to virtual mediums of exchange whose transactions are tracked online since they use blockchain wallet technology. It is a payment method where goods and services are exchanged online. It is appealing because the technology involved is very secure since transactions are managed and recorded on many computers on a network.
Q: What does AML stand for?
Answer: AML stands for anti-money laundering. AML comprises laws, regulations, and policies made to curb money laundering. AML activities are enforced by established regulating bodies whose role is to enforce anti-money laundering laws by ensuring that banks and other financial organizations comply with the rules and guidelines meant to eliminate money laundering.
Q: What is the meaning of AML software?
Answer: AML software is a computer program that financial service providers use to analyze their client’s data and to detect fishy transactions. They filter data and classify it on levels of suspicion to check for any anomalies in the transactions and the beneficiaries’ addresses to identify legal and illegal financial activities.
Q: What steps are involved in laundering money?
There are three stages involved in money laundering. The first step is transferring unlawfully obtained funds into a legitimate banking system. For example, depositing money earned from the sale of narcotics into a bank account or using it to purchase cryptocurrency are both acceptable options. Once illicit money has been introduced into the recognized financial system, it is layered in order to conceal the source of the funds via the use of several transactions and deceptive accounting. Last but not least, the money is integrated and withdrawn from the legal account in order to fund the planned illegal activity.