Governments are doing everything they can to combat money laundering (ML) and crimes related to cryptocurrencies. The UAE police have planned to use Artificial Intelligence (AI) and Blockchain to track crypto money laundering and prevent other types of crimes related to digital currencies.
In 2020, laundered crypto assets were estimated to exceed $6 billion. According to the Chainalysis report, criminals could launder between $8.6 billion and $14 billion in cryptocurrency in 2021. Dubai Police could strike a blow by targeting the main services used by crypto money launderers and other crypto criminals to launder digital currencies. In most cases, crypto assets are laundered through specific services, including crypto exchanges that are favored by money launderers - most of which appear to be intentionally designed for money laundering.
Due to the ongoing war between Ukraine and Russia, cryptocurrency companies in the UAE have received many requests to liquidate large amounts of digital currencies, as most citizens of Russia are looking for an immediate safe haven for their assets.
Some people use crypto assets to buy and invest in real estate in the country. Others are asking crypto companies to exchange their cryptocurrency for banknotes so they can use them elsewhere.
Tokens like Bitcoin can make it easier for criminals to hide the origin of illicit proceeds and are increasingly becoming the currency of choice for criminals. Cryptocurrencies are being used as payment to purchase illicit products, ransomware attackers are increasingly demanding the ransom in cryptocurrency, and more.
Therefore, authorities need to intervene very quickly to combat the risk of ML and other crimes related to crypto assets.
Dubai Police, in collaboration with the Ministry of Interior and the Virtual Asset Regulatory Authority (Vara) (which will act as an autonomous regulator), will use DLT and AI to predict and prepare for the risks associated with cryptocurrencies internally and externally. These technologies will be integrated into their system and will help the police to build a solid foundation to fight digital crime, improve their capabilities, and also reduce the time it takes to respond and recover laundered money.
DLT has unmatched properties that can greatly facilitate the fight against ML. Every transaction conducted via DLT leaves an immutable trail of records that is difficult or impossible to tamper with. This makes it easier for Dubai and Vara police to trace the original origin of money laundered through cryptoassets.
In addition, AI tools have the potential to track and trace ML in a variety of ways using specialized algorithms. Basically, these algorithms analyze vast pools of information and generate a red flag when something is detected, such as suspicious transactions or account activity that could be considered malicious.
The police cybercrime department will use DLT and AI to investigate illegal operations that may involve trading cryptocurrencies, selling non-fungible tokens, or any form of token.