The UK’s National Crime Agency (NCA) has called on the country’s authorities to regulate decentralized crypto mixers that enable multiparty bitcoin (BTC) transactions, claiming that the process can be used by criminals to launder money from illicit sources and to avoid detection.
Gary Cathcart, Head of the financial investigation at the National Crime Agency, told the Financial Times that,
By using open-source software that enables reshuffling and redistributing crypto, the process “can be used to provide a ‘layering’ service, churning criminal cash, obscuring its origins and audit trail, similar to how a cash business might be used by criminals to legitimise cash through the banking system.”
A November 2021 analysis by cybersecurity firm Intel 471 provides insight into the role of crypto mixing in obfuscating the origin of criminal earnings. One of the wallets handled BTC transactions in excess of BTC 54 (USD 2.1m) between June 2020 to July 2020.
By regulating the process, the NCA says the authorities could oblige mixers to comply with the UK’s anti-money laundering regulations, perform customer checks, and keep track of audit trails that would allow identifying crypto’s owners.
Owing to this, British law enforcement could properly investigate “what is often serious criminal activity”, including ransomware attacks, fraud, state-sponsored crime, and terrorism, Cathcart said.
It is noteworthy that, facing increased scrutiny by government agencies such as the NSA, CoinJoin, a BTC mixing service that is part of Wasabi Wallet, recently started blacklisting bitcoin tied to illegal activity, as confirmed by Adam Ficsor, Co-founder of the wallet.
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