CrimProf Blog

Editor: Kevin Cole
Univ. of San Diego School of Law

Tuesday, May 28, 2013

"Online Service Is Accused in Laundering of $6 Billion"

From the New York Times:

The operators of what the authorities described as one of the world’s largest online money laundering organizations, a central hub for criminals trafficking in everything from stolen identities to child pornography, were charged in an indictment unsealed by federal prosecutors on Tuesday.

. . .

The business operated with even more anonymity, law enforcement officials say, than Bitcoin, a payment network started in 2009 to offer a decentralized way to create and transfer electronic cash around the world. Bitcoin transactions are stored in a public ledger, making it possible to trace Bitcoin transactions even years after the fact.

. . .

Once an account was established, a user could send or receive money to other users.

However, Liberty Reserve did not take or make payments of actual cash directly. Instead, they used “third-party ‘exchangers,'” according to the indictment.

These exchangers would take and make payments and then credit or debit the Liberty Reserve account. Law enforcement officials seized four currency exchanges that operate with the business and 35 other Web sites.

This allowed Liberty Reserve to avoid collecting any banking information on its clients and not leave a “centralized financial paper trail.”

Liberty Reserve recommended a number of “preapproved exchangers” to its users, which “tended to be unlicensed money transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam,” the indictment said.

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