Illegal business with crypto: Mafia discovers digital money for itself

Illegal business in crypto
Mafia discovers digital money for itself

In Italy, organized crime is involved everywhere in some parts of the country. Mafiosi use digital money to disguise global drug deals and crooked deals – also in Germany.

Digital currencies are also increasingly an issue for organized crime. The mafia in Italy repeatedly uses cryptocurrencies for its illegal business. “All criminal organizations, including those of the Mafia type, have an interest in using these tools for their business,” says a head of the Italian anti-Mafia police force, Dia. The Dia investigates organized crime in Italy. For his protection, the commissioner does not want to be named.

The most famous cryptocurrency is Bitcoin. It is purely digital, so no money that can be taken in hand. Digital money is mostly based on cryptic codes made up of numbers and letters. As a rule, they are traded in a decentralized manner and directly between users, i.e. not through a financial institution and outside of government regulation. To ensure that bitcoins are not copied multiple times, they are based on a complex database technology, the blockchain.

The mafia entered the financial world because of this technological development, explains the slide commissioner in his office on the outskirts of Rome, which is decorated with documents. Transactions with cryptocurrencies are fast and offer security and a kind of anonymity – advantages that are of course also useful for illegal business. It is therefore not easy to find those who are behind the trade. The police do not reveal figures on sales, police operations or damage caused by illegal business – investigative tactics.

The direct line for cocaine businesses

Mafia organizations such as the Calabrian ‘Ndrangheta use cryptocurrencies, for example, for trading with Latin American cartels, as can be read in the latest report to parliament on the first half of 2020. The ‘Ndrangheta is mainly active in the cocaine business and uses digital money to handle payments with Colombian cartels.

The report also states: “The Mafia also seems to be paying attention to cybercrime and the possibilities of the world of the dark web, which are difficult to control, in order to inject huge flows of economic resources into the context of total illegality”. In plain language this means: The Mafia moves enormous sums of money in the hidden corners of the Internet, the so-called Dark Web. There, payments are made primarily with digital currencies. The mafia can launder money or settle bills unnoticed.

Despite anonymity and global networking, there are still successful searches. At the end of April this year, Italian police arrested more than two dozen suspected members of the Nigerian mafia Black Ax across the country in connection with illegal immigration and drug trafficking. They are said to have bought counterfeit credit cards on the Internet with Bitcoin and used them to purchase other goods.

In August 2019, the handcuffs clicked on four Ukrainians in the Tuscan city of Lucca. According to the investigators, they belonged to an organization that bought all kinds of drugs from cocaine to LSD to marijuana via the dark web in the Netherlands and Germany and paid for them with Bitcoin.

Hunt down cyber criminals

According to the Dia semi-annual report, the police have strengthened their units that investigate on the Internet in recent years. The financial police and the Carabinieri, for example, are also involved in the searches. In the investigation, it is also important to confiscate everything from a legal point of view in order to protect the immutability of the data, as a Carabinieri general told the newspaper “La Repubblica” in June. This is the only way they can later be used as evidence in court.

In Germany, too, cryptocurrencies are now part of the world of crime. “The use of cryptocurrencies for online payment in the context of criminal offenses in the area of ​​responsibility of the customs administration has increased significantly,” explains the General Customs Directorate in Bonn when asked. According to the investigators’ findings, in most cases the criminals use Bitcoins and the currency Monero.

The General Customs Directorate also states that cryptocurrencies are used in the context of criminal offenses to completely anonymize the ordering and shipping processes of incriminated products or services. This allows the criminals to conceal their identity or location – because payment transactions run from user to user and not, for example, via a bank, which in case of doubt could report irregularities to the law enforcement authorities.