Tracing the untraceable : evaluating forensic methods in detecting cryptocurrency laundering

Abstract

Cryptocurrency laundering is increasing in both volume and sophistication. National and international institutions are recognising the unique threat presented by this innovative laundering method and have started implementing regulatory frameworks to combat the illicit use of the blockchain technology. The purpose of this study was to examine the forensic blockchain investigative tools used by analysts and investigators to detect and trace illicit cryptocurrency assets. Furthermore, this research focused on outlining the merits and limitations that affect the investigative process. Findings revealed that professionals in the field anticipate a continued rise in cryptocurrency laundering in the coming years. Although private blockchain analysis software was found to be critical in tracing these assets, certain limitations such as advanced anonymisation techniques and disparity in regulatory standards across jurisdictions, significantly hinder investigative efforts. Furthermore, findings emphasise the importance of implementing a multifaceted approach combining on-chain analysis, off-chain analysis and contextual intelligence in such investigations. This research contributes to the understanding of blockchain investigations particularly when combating cryptocurrency laundering.