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The role played by cryptocurrencies in money laundering has been greatly exaggerated by opponents of the emerging asset class, according to a new report from the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

The network, which banks and other financial institutions use for transferring information securely across borders, says fiat currency is still the most widely used medium for such illicit purposes.

Money laundering remains a serious international problem. United Nations research indicates that anything from $800 billion to $2 trillion is laundered via fiat channels each year. But cryptocurrencies are used in just a small fraction of such activity.

“Identified cases of laundering through cryptocurrencies remain relatively small compared to the volumes of cash laundered through traditional methods,” said SWIFT.

SWIFT said traditional methods such as using cash mules, hawala (an informal system that employs intermediaries), front companies, cash businesses, and the illegal drug trade remain dominant in money laundering. However, the use of cryptocurrencies is minimal, says the report, with even the cybercriminal usage of digital assets like bitcoin being “few and far between.”

However, there are elements that turn to crypto for criminal purposes. One of them is the notorious Lazarus Group, a hacking entity allegedly controlled by North Korea that steals moneys, converts it into to cryptocurrencies, and then channels it back to the rogue state.

Other culprits include unidentified European hacker groups that use pilfered funds to buy prepaid crypto debit cards, a special type of card that stores digital assets and then converts them to fiat when a transaction is made by the holder, said SWIFT, which stressed that the use of crypto for laundering stolen bank funds will likely increase in the future..

“Favorable factors include the growing number of altcoins (alternative cryptocurrencies) that have recently launched and which focus on providing full transaction anonymity,” said the report.

Services such as “mixers” and “tumblers” – online tools that mix up cryptocurrency transactions with legitimate transactions for concealment purposes — are also a looming threat. Also on SWIFT’s radar are privacy-centric cryptocurrencies such as Monero, which are hard to track because they obfuscate transactional addresses.

But for the time being, it is fiat currency and banks that are the biggest concern for those fighting money laundering, as Gemini crypto exchange’s Tyler Winklevoss pointed out on Twitter: “As we know, preferred methods for money-launderers are fiat currency and Goldman Sachs (1MDB),” referring to the ongoing 1Malaysia Development Berhad scandal.

Other notable scandals include one involving HSBC, which was caught several years ago laundering cash for drug cartels and alleged terrorists.

In 2013, Lanny Breuer, the assistant attorney general for the US Department of Justice, told reporters, “HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries… The record of dysfunction that prevailed at HSBC for many years was astonishing.”

US Attorney Loretta Lynch added, “HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the US financial system…”

Unlike those convicted of petty drug offenses, the executives responsible spent no time behind bars.

HSBC was forced to pay a fine of $1.9 billion – about four weeks’ worth of its pre-tax profits.

Will bitcoin eventually emerge as the preferred vehicle for money laundering?

Tech journalist Matt De Silva doesn’t think so: “Laundering money through bitcoin is a bad idea – not only because it’s illegal, but also because it leaves a permanent trail. Defendants have repeatedly been undone because they’ve relied on the cryptocurrency for some part of their nefarious activities. Sometimes, they’ve been arrested years after their alleged crimes.”

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