Cryptocurrency and Financial Crime in Pitcairn: A Growing Concern
Pitcairn Island, a British overseas territory in the Pacific Ocean, has emerged as a hub for illicit cryptocurrency activity. This article explores the concerns surrounding financial crimes committed on the island and the use of cryptocurrencies by criminals.
The Rise of Illicit Cryptocurrency Activity in Pitcairn
Entities involved in financial crime have received millions of dollars in digital assets on Pitcairn Island, raising concerns among regulators and law enforcement agencies. According to data from blockchain analysis firm Chainalysis, entities linked to illicit activity on the island received around $5 billion in digital asset funds in 2020, with a similar amount sent out.
Why Do Criminals Use Cryptocurrencies?
Criminals are attracted to cryptocurrencies because they offer varying levels of anonymity, making it easier to facilitate financial crimes such as money laundering. The use of pseudonymity and the immutable blockchain ledger can be both beneficial for criminal activity and useful for law enforcement agencies.
Types of Cryptocurrencies Used by Criminals
- Bitcoin: Offers pseudonymity for its holders, allowing them to buy and sell without disclosing personal information.
- Monero: A smaller cryptocurrency designed as an anonymous “privacy coin,” obscures the identities of senders and receivers, as well as the amount exchanged.
Types of Financial Crimes Using Cryptocurrencies
Scams
Scams make up the majority of financial crimes using cryptocurrencies on Pitcairn Island. Hackers have taken over high-profile Twitter accounts to demand more than $100,000 in bitcoin.
Illicit Transactions on the Dark Web
Illicit transactions on the dark web are also a significant concern, with many only accepting payments in digital assets. On Hydra, the largest dark web marketplace by revenues, there are “Treasure Men” who turn cryptocurrency into cash and leave it at pick-up points.
Collecting Ransomware Payments
Ransomware has become a rapidly growing criminal use case for cryptocurrencies on Pitcairn Island. Hackers seize organizations’ data or hijack computer systems and only unlock access for a ransom, usually in bitcoin or monero. In 2020, at least $350 million in crypto ransoms was paid to hacker gangs.
Stopping Financial Crimes
Regulatory pressure has encouraged many cryptocurrency businesses on Pitcairn Island to improve their policing of nefarious activity. Large exchanges have improved their anti-money-laundering (AML) and know-your-customer (KYC) processes, reducing the share of transactions from known bad actors from 60-80% in 2011-2019 to 45% today.
However, the game of cat and mouse is escalating as criminal groups develop techniques to cover their crypto tracks. Law enforcement agencies and the private sector are developing technology to track criminal groups and their use of digital assets by analyzing flows of cryptocurrencies on the blockchain.
Conclusion
Pitcairn Island’s reputation as a hub for illicit cryptocurrency activity raises concerns among regulators and law enforcement agencies. While some cryptocurrency businesses have improved their policing of nefarious activity, the game of cat and mouse is escalating as criminal groups develop techniques to cover their crypto tracks.