How advanced analytics can help law enforcement and security organizations overcome cryptocurrency challenges
In today’s hectic news cycle, there always seems to be a new story angle that is focused on cryptocurrency. The increasingly popular digital currency’s market value recently reached $2 trillion for the first time and the Coinbase IPO was referred to as "crypto’s coming-out party." But, just as cryptocurrencies are gaining traction with consumers as legitimate transactions, they are also massively used by criminal actors and terrorists, with a global total of $10 billion in illicit activities in 2020.
Though technology has helped to advance industries and markets tremendously, it is clear that advanced technology has also played a part in illegal activities around the world. We are witnessing a drastic shift from the traditional financing of criminal and terror actors to a new world of digital financing, creating a seriously daunting task for security and law enforcement organizations to anticipate, track and identify illegal activities.
In the past, criminals and terrorists typically used bank accounts to store their illegal funds. Yet, it's not an optimal option for them, since banks are highly regulated institutions and are subject to specific requirements, and governmental sanctions may be applied, like freezing or seizing accounts. Storing funds in suitcases, under mattresses or in floorboards, is also not optimal - it's risky, required physical space and difficult to transfer.
Hence, we shouldn't be surprised that criminal and terrorists are turning to the anonymous, borderless, and hard-to-trace cryptocurrencies.
Despite the advanced techniques criminal organizations and terror groups use to conceal the money trail and evade law enforcement, like mixers, shapeshifters, or fake IDs, there are also great advancements in analytics that can help limit the appeal of cryptocurrency across criminal organizations.
For security and law enforcement organizations, deanonymizing criminal actors and terrorists is a challenging task that is impossible to achieve without the right solution. There is no link between an anonymous cryptocurrency address and the person behind it. Criminals and terrorists can transfer funds easily, quickly, and globally through websites and/or mobile apps. As quickly as the technology is innovating, threat actors are moving as fast to understand how to manipulate the technology to help evade investigators and continue to expand their empires. However, by using advanced analytics, augmenting multiple data sources and techniques, security and law enforcement organizations can deanonymize cryptocurrency users’ identity and crack down on criminal behavior that has become an enigma for many investigators.
Using Advanced Analytics to Crack the Code
Advanced analytics eliminate the anonymity of cryptocurrency users and reveal their real identities. These innovative analytics analyze the data, draw actionable insights, and present them in a user-friendly way for the crypto-investigators to generate insights. Think of it as a way to visualize the analyzed data, which enables law enforcement analysts to understand the money trails, generate new leads, and promote investigations.
By pinpointing illicit transactions, investigations of the use of cryptocurrency within criminal organizations and terror groups are fast-tracked. This advanced analytical approach enables to directly reveal the identities of transaction makers, with no dependency on crypto exchanges' cooperation with law enforcement agencies.
Implementing such technology also allows security and law enforcement organizations to both track the full trail of all suspects’ cryptocurrency activities, and also reveals historical and ongoing transactions that may help to solve other open investigations or jumpstart others that may have stalled because the right technology to follow the money trail did not exist. By pinpointing these new areas of investigation, security and law enforcement organizations can make connections between known suspects and other actors involved in multiple schemes.
There’s no question that cryptocurrency adds a challenging layer to the never-ending game of cat and mouse between criminals and terrorists to law enforcement agencies and security organizations. Advanced analytics are a step in the right direction, as we try to reveal the identity of fraudsters behind these illicit activities. They move investigations forward, as investigators trim the suspect field, collect evidence, and follow the breadcrumbs that will eventually result in an arrest and a conviction.
Tom Sadon is Product Marketing Manager at Cognyte