The cocaine market exploded between 2014 and 2023. Production in Colombia increased more than sevenfold to nearly 2,700 tonnes, according to the United Nations Office on Drugs and Crime (UNODC).

Behind the scenes, drug traffickers find equally illicit ways to pay their suppliers and foot soldiers, or to spend the proceeds of their criminal trade. Their solution? Money laundering. It is estimated that 25% of the funds collected is laundered.

Criminals generally launder money in three stages: firstly, they inject it into the financial system; secondly, they layer it with the aim of obscuring the origin of the funds, and finally, they integrate it into the financial system, a process aimed at legitimising the money. This typology does not take into account the fact that money laundering is sometimes partial, i.e. it stops at the first stage. Let us consider an example.

Take the money from cocaine originating from the main exporter of coca: Colombia. Some of it is laundered entirely on site, by reinjecting the cash into legitimate businesses – restaurants, hairdressers, etc. – while another part is used to pay for the goods. To do this, it has long been sufficient to provide cash – in banknotes – which is then laundered in Colombia.

In Europe, the cash is exchanged for €500 notes by accomplices working in banks and then entrusted to money mules. The latter take the plane with sums of between £200,000 and £500,000.

It is this link in the drug trafficking chain – bulk cash smuggling – that has allowed cryptocurrencies to emerge as a key cog in narco traffic.

To fully get one’s head around the use of cryptocurrencies in drug money laundering, one needs to understand how cash smuggling works. An article by Peter Reute and Melvin Soudijn........

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