Three to four thousand millions of pounds of criminal money in Europe is being laundered through cryptocurrencies, according to Europol.
The agency’s director Rob Wainwright told the BBC Panorama that regulators and industry leaders must work together to address the problem.
The warning comes after Bitcoin’s value fell by half from a record in the month of December.
The uk police have not commented on the program.
Mr. Wainwright said that Europol, the European Union Agency for Law Enforcement Cooperation, it is estimated that approximately 3-4% of the € 100 billion in illicit proceeds in Europe are laundered through cryptocurrencies.
“It is growing very quickly and we are very concerned,” he said.
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There are many different types of cryptocurrencies, but the most well-known is the Bitcoin. They are intended as a digital alternative to pounds, dollars or euros.
However, unlike traditional currencies, which are not printed by governments and traditional banks, nor controlled or regulated by them.
Instead, digital currencies are created by computers running complex mathematical equations, a process known as “data mining”. A network of computers all over the world, then make a follow-up of transactions through virtual addresses, to hide individual identities.
The anonymity and lack of regulation of the nature of the virtual currency is attracting criminals, which makes it difficult for the police to track since it is difficult to identify who is moving the payments.’Money mules’
Mr Wainwright said: “it is not the banks and governed by a central authority, so that the police can not control the transactions.
“And if they do they are identified as criminals who have no way to freeze the assets unlike in the banking system.”
Another problem Europol has identified involves the method that criminals use to launder money.
The income of criminal activities are being converted to bitcoins, will be divided into small quantities and given to people who apparently are not associated with criminals, but are acting as “money mules”.
These money mules then convert the bitcoins back into money, before returning to the criminals.
“It is very difficult for the police in most cases to identify who is in charge of this,” Mr. Wainwright said.
He said police were also seeing a trend where the money is “in the billions” generated by the sale of drugs across Europe is going to convert in bitcoins.
He called on the people that are running the Bitcoin industry to work with law enforcement agencies.
“They have to take a responsible action and to collaborate with us when we are investigating very large-scale of the crime,” he said.
“I think that they also have to develop a better sense of responsibility about how you are running the virtual currency.” “Too slow”
Although the British police still have to respond to requests from Panorama, the Parliament is seeking to pass regulations.
The Treasury of the selection Committee is looking for in cryptocurrencies and the details of the european union regulation to require retailers to disclose the identity and any suspicious activity is expected at the end of this year.
Alison McGovern, the Labour MP for Wirral South, who is serving on the committee, has been calling for an investigation of cryptocurrencies.
“I think that he will call the attention of the Treasury and the Bank [of England] and others on how to put in place a system of regulation,” he said.
“I think probably the hand on the heart we have all been too slow, but the opportunity is not lost, and we must all continue with the work now.”
“Who Wants to be a Bitcoin Millionaire?” is a collaboration between the BBC and Click on the Panorama and will be broadcast on BBC One on 12 February at 20:30 GMT.