The report, published on Monday by crime-fighting agencies, highlights that law enforcement will face challenges in investigations involving crypto mixers and digital assets.
Crypto mixers have recently come under the scrutiny of global regulators. Tornado Cash developer Alexey Pertsev was sentenced to five years in prison by a Dutch court for money laundering. Tornado Cash allows cryptocurrency users to exchange tokens while concealing wallet addresses on networks such as Ethereum, Arbitrum, Chain, BNB, Avalanche, and Optimism.
The report also notes that Tornado Cash uses zero-knowledge proofs, enabling users to withdraw funds without revealing the size of their initial deposit. This makes it difficult for law enforcement to trace the origins of illegally obtained cryptocurrency.
There are also networks like Monero, which integrate privacy into their protocols, concealing the identities of the sender, the recipient, and even the amount sent.
Layer 2 solutions, including the Lightning Network, can be used by criminals to make payments to each other without indicating the time and amount.
The French Autorité des Marchés Financiers (AMF) stated that cryptocurrency remains a high money laundering risk due to its popularity, cross-border nature, and anonymity.