Described as a rapidly evolving landscape of financial and economic crimes that threatens the internal security of the EU, Europol has praised the freedom and security offered by blockchain technology.
Europol has also raised concerns over increasing criminal activity within decentralized finance (DeFi).
Europol warns of increasing criminal activity in DeFi and NFT sector
Europol, the European Union agency for law enforcement cooperation, recently published its European Financial and Economic Crime Threat Assessment.
The report highlights the complexities of financial and economic crimes affecting the EU, such as money laundering, corruption, fraud, intellectual property crimes and counterfeit currency. It emphasizes the importance of collaboration, information sharing and public-private partnerships to effectively combat these criminal activities.
The fintech revolution characterized by integrating technology into financial services presents opportunities and risks. Criminals have increasingly misused these innovations, particularly in digital banking and non-bank financial institutions.
Decentralized finance (DeFi), based on blockchain technology, promises greater freedom and security. However, the lack of regulation in this area leaves room for economic crimes, as criminals accumulate illicit assets on DeFi platforms.
Highly volatile cryptocurrencies are also targeted in fraudulent schemes and money laundering.
Non-fungible tokens (NFTs) have grown in popularity, but they have also attracted fraudsters due to their instant trading capabilities. NFTs pose a significant risk of money laundering given their cross-border trade features.
Europol urges cooperation to combat financial crimes in the EU
Furthermore, the emergence of the metaverse, a digital space for various activities, has been adopted by the financial sector and presents new opportunities for criminals. Cases of fraud and theft have already been reported within the metaverse, indicating a possible trend of organized crime in this virtual environment.
In a recent case in January 2023, law enforcement officials took down a crypto platform called BitZlato that was suspected of money laundering linked to Russian entities under EU sanctions.
This platform allowed the rapid conversion of various cryptos into Russian rubles, involving assets worth an estimated EUR 2.1 billion, a significant portion of which was linked to criminal activities.
In the face of these emerging financial and economic crimes, Europol emphasizes the need for proactive measures, international cooperation and staying ahead of criminal innovation to ensure the security and stability of the EU.