The cocaine marketplace exploded between 2014 and 2023. Manufacturing in Colombia higher greater than sevenfold to just about 2,700 heaps, in line with the United International locations Workplace on Medication and Crime (UNODC).
In the back of the scenes, drug traffickers to find similarly illicit techniques to repay their providers and pawns, or to spend the proceeds of the legal industry. Their answer? Cash laundering. It’s estimated that 25% of the accumulated price range are laundered.
Criminals normally launder cash in 3 levels: first, they inject it into the monetary machine; 2nd, they layer it with the purpose of obfuscating the foundation of the price range, and after all, they combine it into the monetary machine, a procedure that objectives to legitimize cash. This typology does no longer take into accout the truth that cash laundering is on occasion partial, this is, it stops within the first degree. Let’s believe an instance.
Take the cocaine cash that comes from the principle exporter of coca: Colombia. A few of it’s totally laundered at the spot, through re-injecting money into authentic companies – eating places, hairdressers, and so on. – whilst the opposite section is used to pay for items. To succeed in this, it has lengthy been enough to supply money – in banknotes – which can be then laundered in Colombia.
Money smuggling
In Europe, accomplices operating in banks alternate money for €500 notes after which entrust the mules. The latter take a aircraft with sums between £200,000 and £500,000.
It’s this hyperlink within the chain of drug trafficking – the smuggling of money – that has allowed cryptocurrencies to emerge as a key cog within the drug industry.
To completely perceive the usage of cryptocurrencies in drug cash laundering, you wish to have to know how money smuggling works. The thing through Peter Reute and Melvin Soudijn (the primary is a criminologist and the second one an intelligence officer of the Dutch police) made it conceivable to as it should be measure the prices of this operation. They accessed the accounting information of traffickers in six circumstances who had been attempted for crimes that befell between 2003 and 2008. Between the Netherlands and Colombia, they amounted to 800 million euros.
The prices had been about 3% for converting small denominations into 500 euro notes, the same quantity for paying for a mule, and rather less for his or her shuttle bills. Heavy surveillance at Amsterdam-Schiphol Airport intended they needed to fly in from different portions of Europe. Allowing for the extra prices, simply transporting the price range to Colombia prices between 10% and 15%, and even as much as 17% of the transferred quantities.
Particularly:
Cocaine leaves Colombia.
It’s offered through intermediaries in Europe.
The cash accumulated from this sale is transformed into 500 euro banknotes, at a price of three% charge.
500 euro banknotes are entrusted to mules, with a charge of three%.
Mules shuttle to Colombia at a three% charge.
The money arrives in Colombia to pay for the medication and is then laundered on web page, once more at price.
In step with the authors, anti-money laundering laws have controlled to noticeably build up the prices of smuggling, particularly shipping, however no longer the promoting value, for the reason that the French cocaine marketplace is booming. Certainly, nationwide intake has higher ninefold since 2000. To bypass those laws, investors depend at the €500 observe.
The tip of the five hundred euro banknote
In a twist on Might 4, 2016, the Ecu Central Financial institution (ECB) determined to forestall issuing €500 notes. The choice of those banknotes in circulate has fallen from 614 million on the finish of 2015 to simply underneath 220 million through mid-2025.
“It has been decided to permanently stop production of the €500 banknote and to remove it from the Europa series, taking into account concerns that this denomination could facilitate illegal activities,” the financial institution defined.
In the similar 12 months, a brand new monetary tool burst onto the scene: Bitcoin.
Google Tendencies Bitcoin 2016-2019. Input cryptocurrencies
As €500 notes have grow to be more and more scarce since 2016, bitcoin has helped redraw the money industry map.
As an alternative of an built-in chain the place money is returned to the drug supply to pay for supply, we’re witnessing a means of specialization. At the one hand, drug traffickers alternate their cash for cryptocurrencies, which they use to pay for provides in Colombia. Then again, the cash laundering community collects the banknotes and transports them by means of more uncomplicated routes, akin to the ones resulting in Dubai (United Arab Emirates).
How do we all know that? Thank you, as an example, to Operation Destabilization of the British Nationwide Crime Company. The clicking unencumber describes a world cash laundering community managed through the Russians. They used an alternate that failed to meet its accountability of care, Garantek, for cryptocurrency transactions, and Dubai, for money transactions.
The cash laundering community accumulated money from drug traffickers and paid them in crypto tokens (particularly USDT-Tether), charging best 3% charges. In comparison to 10% to fifteen% of shipping prices in Colombia ahead of the abolition of the €500 observe, this represents a saving of 70% to 80%.
Reporting
Cryptocurrencies – to begin with Bitcoin and now stablecoins akin to USDT-Tether – have allowed drug traffickers to avoid wasting on the price of sending money through opting for the most secure routes. It’s too early to understand whether or not the numerous build up within the transatlantic drug industry, as reported in a contemporary investigation through the Monetary Instances, is connected to this technical innovation.
Particularly, the brand new means follows this new path between drug traffickers and cash laundering networks:
Cocaine leaves Colombia.
It’s offered through intermediaries in Europe.
The cash raised from this sale is exchanged for USDT-Tether cryptocurrencies, with a three% charge.
USDT-Tether cryptocurrencies are despatched to Colombia to pay for medication.
For the cash laundering community, the money is entrusted to mules, which shuttle to Dubai, for a charge of one%.
In Dubai, cash is laundered with a charge of one%.
Law in opposition to cash laundering of crypto belongings
It’s affordable to imagine that the new anti-money laundering regulations on crypto-asset carrier suppliers in international locations that experience signed the Crypto-asset Reporting Framework will complicate issues for legal organizations. We will be able to additionally believe that the latter will establish even the smallest loopholes within the legislation and exploit them.
The discovery of cryptocurrencies has set again the battle in opposition to arranged crime for years, however a “coalition of the willing” together with Switzerland, the Bahamas, Malta and France is after all organizing.
In France, the battle in opposition to cash laundering is being reinforced through a legislation “aimed at freeing France from the trap of drug trafficking”, followed in June 2025. A specialised nationwide public prosecutor’s place of business was once established. A spread of measures are being presented, from administrative closures of faux companies (through prefects, no longer mayors, who’re over-exposed) to asset freezes of drug traffickers and projects in opposition to crypto-asset blending.
However traffickers are adapting to keep away from being stuck, as we’re going to see in any other article.
