The role of cryptocurrencies in the legalization of criminal proceeds

Abstract

This bachelor thesis focuses on the role of cryptocurrencies in the process of laundering the proceeds of crime, particularly in the context of money laundering. The aim of the thesis is to explore how cryptocurrencies, due to their anonymity and decentralized nature, facilitate the process of money laundering and circumvention of financial regulation, thus providing new opportunities for criminals to carry out illegal transactions. The theoretical part of the thesis focuses on the theoretical underpinnings of cryptocurrencies and blockchain technology that are key to their operation, and explores in detail the money laundering process and its phases. The thesis analyzes the mechanisms by which cryptocurrencies are used to mask the origin of illicit financial flows and their subsequent legalization. The practical part of the thesis includes simulations of cryptocurrency transactions using real tools to anonymise financial flows that criminals can use to launder illicit funds. At the end of the work, the weaknesses of the cryptocurrency sector regulations are identified and possible measures are proposed to reduce the risk of its abuse in illegal activities.