Canada’s FINTRAC Warns of Rising Crypto Use in Drug Trafficking  

• FINTRAC highlights virtual currencies’ rising use in laundering funds from synthetic opioid trafficking and chemical distribution. 
• Centralized exchanges and private wallets are preferred by criminals for payments in drug-related transactions. 
• The agency is focusing on the multilateral approach to the fight against opioid-related financial crimes in the crypto space. 

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has noted that more and more funds from synthetic opioid trafficking are being laundered using cryptocurrencies. The agency revealed in its latest January 23 report that drug producers and brokers favor virtual currencies for payments in chemical distribution and other services. These transactions often involve wallets hosted on centralized crypto exchanges, raising concerns over illicit financial flows within the crypto ecosystem. 

Crypto Payments in Chemical Distribution

FINTRAC’s findings underscore how digital assets are leveraged in the synthetic opioid production chain. The report highlights instances where payments for chemicals are conducted through wire transfers or cryptocurrencies. Warehouses, third-party logistics facilities, and storage lockers used in chemical shipments are often leased using credit cards, crypto transactions, or email money transfers before the materials reach drug labs for production. 

To combat this issue, FINTRAC has outlined key indicators for identifying cryptocurrency-related laundering activities. These include transactions involving virtual currency addresses associated with darknet marketplaces like Blackprut, ASAP, and Mega Darknet. Furthermore, individuals using mixing or tumbling services or immediately transferring crypto funds to private wallets or centralized exchange deposit addresses are flagged as high-risk behaviors. 

Call for Collaboration in the Crypto Ecosystem

FINTRAC is urging businesses and institutions within the cryptocurrency ecosystem to integrate these risk factors into their anti-money laundering protocols. Reporting entities are encouraged to monitor clients transacting with anonymous mailing services, engaging in online forums like Reddit or Bitcoin Talk, or interacting with blockchain addresses linked to suspicious or illicit activities. 

Law enforcement agencies and financial institutions are advised to adopt proactive measures to mitigate risks associated with cryptocurrency use in opioid trafficking. By identifying and addressing these indicators, FINTRAC believes stakeholders can better prevent money laundering tied to the production and distribution of synthetic opioids.