Money laundering using cryptocurrency was up 30 per cent last year, but only made up just 0.05 per cent of all crypto transaction volume, a new report has found.

Blockchain data platform Chainalysis, which offers tools to help banks, businesses and governments comply with financial regulations, estimates that cybercriminals laundered US$8.6 billion worth of crypto in 2021, up from $6.6 billion in 2020.

Overall criminals have laundered over US$33 billion in crypto since 2017, moving most of it to centralised exchanges.

For comparison, Chainalysis cites an estimate from the UN Office of Drugs and Crime that between US$800 billion and $2 trillion in fiat currency is laundered each year.

“We cite those numbers not to try and minimize cryptocurrency’s crime-related issues, but rather to point out that money laundering is a plague on virtually all forms of economic value transfer, and to help law enforcement and compliance professionals be aware of just how much money laundering activity could theoretically move to cryptocurrency as adoption of the technology increases,” the report says.

Crypto money laundering is quite concentrated, with just 583 deposit addresses receiving 54 per cent of all funds from illicit addresses in 2021, the report says. Each of those 583 wallets received at least US$1 million.

The report only looked at money laundering from “crypto-native” crime, such as hacks, darknet sales and ransomware attacks. The two highest- grossing crypto-related crimes were thefts and scams.

It’s more difficult to know how much fiat currency from offline crime such as drug trafficking is converted into crypto to be laundered, although the report says that does happen.

It notes one example from northern England in which drug traffickers would courier cash from their street dealers to a broker that would convert the cash into Bitcoin for a four per cent fee. Greater Manchester Police believe the broker laundered at least £1 million ($1.3 million) for the group.