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Nasdaq Financial Crime Report Reveals $3.1 Trillion in Illicit Funds, Omits Crypto References

The Nasdaq global financial crime report: the details 

The 2024 Global Financial Crime Report, a first of its kind from the stock exchange giant, revealed a staggering $3.1 trillion in illicit funds coursing through the global financial system in 2023. Intriguingly, the report made no mention of Bitcoin, other cryptocurrencies, or stablecoins, drawing significant attention from the crypto community. 

This omission underscored a critical narrative - despite common perceptions, traditional fiat currency remains the primary tool for criminal activities. The report's findings shatter the often-held assumption that the digital currency landscape is the main arena for such illicit flows, highlighting the persistent and pervasive nature of financial crime in conventional banking systems.

Nasdaq's comprehensive analysis sheds light on the alarming extent of financial crimes. In 2023 alone, an estimated $3.1 trillion in illegal funds flowed unchecked through the financial veins of the world. The report dissects these illicit transactions, revealing their contribution to heinous crimes such as drug trafficking, which accounted for $782.9 billion, and human trafficking, linked to $346.7 billion. 

Additionally, a substantial $11.5 billion was funneled into terrorist financing activities. Nasdaq's findings don't stop there; a staggering $485.6 billion was lost to various fraud schemes and bank frauds last year. These numbers not only underscore the magnitude of global financial crime but also spotlight the diverse ways in which these illicit funds permeate different facets of criminal activity, fueling some of the most serious and damaging offenses worldwide.

The role of financial institutions in combating crime

Adena Friedman, Nasdaq's Chair and CEO, emphasizes that these institutions have been at the forefront of the battle against financial fraud for decades. She acknowledges the relentless pressure they face to curb fraudulent activities, underscoring that tackling such a complex issue is not a task any single company, industry, technology, or government can handle alone. Friedman's statement is a clarion call for collective responsibility: 

“Ultimately, we know that no single company, industry, technology, or government is going to solve the complex problem of financial crime alone. We all have a responsibility — to ourselves and to the world — to be part of the solution.”

This sentiment is echoed by Paolo Ardoino, CEO of Tether, who finds the multi-trillion-dollar financial crime issue alarmingly significant. Ardoino advocates for multilateral cooperation as the key to halting these illicit activities, highlighting Tether's ongoing collaboration with law enforcement agencies to freeze addresses and wallets linked to criminal activities.

Paolo Ardoino:

“only through multilateral cooperation will we succeed in stopping these illicit activities.”

“Tether is committed to continuing our cooperative approach with law enforcement to halt destructive financial crimes, and we echo the calls in this Nasdaq report for legacy financial institutions to do their part as Tether is doing,”

Comparing crypto's role in financial crime according to Chainalysis and VanEck

While the Nasdaq report notably omits crypto references in its analysis of financial crime, insights from other sources draw a contrasting picture. A recent report by blockchain analytics firm Chainalysis points to a different trend in the digital currency space. In 2022 and 2023, stablecoins emerged as the preferred choice of criminals over Bitcoin.

Simultaneously, Gabor Gurbacs, Director of Digital Assets Strategy at investment firm VanEck, spotlighted the absence of Bitcoin, crypto, or stablecoins in Nasdaq’s report. Gurbacs asserted that traditional banks and financial institutions are the primary conduits for criminal activities, challenging the often-assumed narrative that cryptocurrencies are the main facilitators of such crimes. 

This perspective adds another layer to the ongoing debate over the role of cryptocurrencies in financial crime, suggesting a more nuanced understanding of the issue.