Banking and Blockchain: Money Laundering, Smart Contracts and More

Editor’s Note: The views expressed are those of the respective author and do not represent the views or stances of Dark Web News. Discussion of money laundering is provided for informational purposes only and should be treated as such.

Money laundering is the process of transferring traceable legal tender through a process to make it harder or impossible to identify the origins.

As the digital economy grows, so do the opportunities for dark actors to exploit fractures in the system.

The decreasing cost of high-tech information and communication devices means that the barrier to entry for smaller associations grows weaker. Criminal activity is usually done best when carried out by as few people as possible.

While this may seem counter-intuitive when taking a glance at all the illegal actions done by larger institutions, it remains true as a general rule. The fewer people who know about and are involved in any given venture, the less likely that leaks and cracks will develop from the human element.

Banks are large and arguably ancient financial institutions. The sheer inertia of carrying out tried and tested doctrine can stagnate the organization.

With that in mind, multiple agencies dedicated to tracking effects of business policy tirelessly work to keep leaders in the industry up to date on numerous issues.

Blockchain represents an opportunity for old-style banks to break into new financial markets. The high volatility of cryptocurrency is a staple of the coins. Fortunes can be had or lost in a matter of days.

Add in the practice of lending money, approving loans, maintaining credit, securities and mutual funds, financing options and a host of other complex operations that banks take part in on a daily basis, and one is left with a potential buffet for shark-faced debt collectors. Part of what old financial institutions do is put up a number of pitfalls for their customers to fall into.

However, the marriage between banks and blockchain is still in its infancy. Time will tell if such suspicions are justified.

While I have the utmost respect for most banks, it is no secret that many of them turn a blind eye to money laundering. Blockchain will make money laundering easier as the technology becomes more widespread, with the major reason being the anonymity of an account’s transactions.

Untraceable and Freshly Scented Cash

First, a quick overview of what money laundering is and how it’s achieved through some normal methods.

Money laundering is the process of transferring traceable legal tender through a process to make it harder or impossible to identify the origins.

It basically works like this; Person A made $5,000. Person A does not want to pay taxes on this income. For the purposes of this example, let’s say Person A lives in a country where taxation is based on the honor system, so government and business records on income are not a priority –  the records are supposed to be managed by Person A.

When calculating his taxes, Person A records that only $2,000 was made. Since the banks and the government have to communicate with each other in virtually every nation, if Person A deposits the full $5,000 into his bank account there’s a chance an investigation can happen. Instead of risking it, Person A opts to launder, or clean, the remaining $3,000.

The steps of basic money laundering are as follows:

1. Placement. This is when a large sum of money is spread out among various small investments and deposits.


2. Layering. This is when money is shuffled around in order to create distance between the sum and the possessor.


3. Integration. The money is brought back to the possessor as legitimate wealth.

Here are some methods of carrying out the above, which I do not endorse by any means.

1. Smurfing. Feeling blue? Instead of depositing a huge lump sum of cash directly into your single bank account, try multiple small transactions across various legitimate accounts instead.


2. Border hopping. No, it’s not just for people. Money flies free if you have the right contacts. Currency exchanges are great for producing a new jurisdiction for money to play in. You will need to take into account the fees of currency exchanges as well as relevant exchange rates, though, so be prepared to pay to play.


3. Taking part in the rare mineral trade makes it easy to put money into valuable rocks which are easy to move across borders or not disclose as assets.


4. Real estate investment has potential as an effective means of getting value out of ill-gotten profits, as long as you are smart about it.


5. Gambling at casinos isn’t a suspicions activity to throw your money away on, and has been a means of money laundering historically used by organized crime.


6. Shell companies. Pay a small fee and receive your very own bogus corporation located in a place you will never actually visit. The sleek, elegant, and simple design of a business that only exists on paper will leave you awe-struck and amazed.

If you’re interested in learning about other methods, you can visit /d/laundromat on the Dread network.

Mixing Coinage

As the digital economy grows, so do the opportunities for dark actors to exploit fractures in the system.

Another way to hide money is to string it through a few Internet services like alt-coin exchanges or nude-cam sites.

To be the best launderer on this side of the Atlantic requires a specific set of skills. Skills which take time to master. Skills that conjure up a nightmare for people trying to track a purchase or exchange.

First, you need a wallet that is compatible with Tor. A Tor-exclusive wallet such as Coincure would fit nicely, and Electrum also comes highly recommended. Once that’s set up, head to the “receive” tab and create multiple addresses.

These will be used as your outputs. Coin-mixing sites are a dime a dozen, so do your research before applying. Set the outputs from your wallet and watch the magic happen.

Once the service receives the coins you sent them, it will make some deliveries of its own. The addresses listed as your output will recover your coins, but those coins will have been sent from different addresses at different times in order to make matching and tracking extremely difficult.

Smart Fire Contracts, More Reliable Than Smart-Fire-Missiles

While some would say that bankers are criminals on the right side of the law, others say that banks are necessary for the continued running of modern society. Hopefully, new innovations such as blockchain systems will put both sides of the coin to rest. Moving forward, one such innovation could be smart contracts.

Smart contracts are code (a block in the blockchain, so to speak) that, when uploaded to a blockchain or perhaps some sort of future type of ledger, generate a specific set of instructions further down the stream when reference conditions are met.

Here are a couple examples of smart contract use we are already seeing in some parts of the world.

1. Supply-Chaining and Logistics.

As the Internet of things becomes more and more integral to the modern world, the ability of companies to manage their input and output grows exponentially. Tracking packages is cheaper than ever and with keeping up to date on which storefronts need restocking is a foundational principle of production. With automatic orders being generated through a blockchain informed by sensors with up-to-date information, the automation process has reached worldwide dominance in almost all industries.

2. Insurance policies.

Claims are always difficult and time-consuming to go through. Automatic contracts can cut down on the problems relating to ease of use. Since blockchain can store almost any type of data parameters, such as hurricane strength or other factors relating to an insurance claim, the need for human intervention is cut out. A smart contract is simply generated from the available data and payment is carried out.

Smart contracts are the way banks will conduct future business along either a closed or open blockchain, or both.

The Spice Must Flow

The circulation of capital, wealth, value, or whatever you would like to call it, is an important goal that most people in power understand. Some only want to sit on what they have and accumulate more, whereas others take a riskier approach. In the end, both types of investors are two sides of the same spinning coin. Cross your fingers it doesn’t slip down a storm drain on a rainy day.