The digitalization of the economy, with the rise of cryptocurrencies like Bitcoin and Monero and central bank digital currencies (CBDCs), has a dual impact on the financial system’s dependence on money laundering, including that from drug trafficking.
From the critical perspective of specialists such as Catherine Austin Fitts, Oscar Ugarteche, Antonio María Costa, and others, digitalization amplifies both the risks and opportunities for addressing this problem. On the one hand, technologies such as cryptocurrencies offer anonymity and speed, facilitating the movement of illicit funds; on the other hand, tools such as blockchain and data analytics can improve transparency, but their effectiveness depends on strict global regulations and overcoming the power dynamics that perpetuate financial opacity.
Cryptocurrencies like Monero and decentralized platforms (DeFi) are ideal tools for money laundering, as they allow for anonymous, cross-border transactions without banking intermediaries, as the Financial Action Task Force (FATF) points out in its 2023 reports.
Drug cartels use them on dark web markets, while mixers like Tornado Cash hide the origin of funds. The FinCEN Files by the International Consortium of Investigative Journalists (ICIJ) reveal that even regulated exchanges, such as Binance, have processed suspicious transactions, often operating in jurisdictions with little oversight. This reinforces Fitts and Ugarteche’s criticism that the now-digitalized financial system continues to rely on illicit flows to sustain its liquidity, especially in a context of deregulation. However, CBDCs, such as the Chinese e-yuan, offer a contrast: their centralized design allows for full traceability, which could make money laundering difficult, although it poses risks of state surveillance, an ethical dilemma that Sassen links to the exclusion of vulnerable communities in digital systems.
The biggest obstacle is global regulatory inequality, a central focus of the work of Radu and the ICIJ. Offshore jurisdictions and emerging economies with weak regulations remain perfect havens for drug money, stolen funds, and/or the proceeds of corruption.
Digitalization exacerbates this, as platforms operate globally with a click of a button, circumventing local controls. Furthermore, as Ugarteche and Salazar warn, the structure of the financial system, digital or not, prioritizes capital accumulation over fairness, incentivizing banks and fintechs to ignore dubious transactions to maximize profits.
Although technologies such as data analytics and blockchain could detect money laundering patterns, their implementation is costly and requires international cooperation, something the FATF recognizes as insufficient. Ultimately, digitalization doesn’t address Fitts’s critique of a system that tolerates illicit money as an economic driver; without structural reforms, it could perpetuate this dependence, especially if financial elites shape regulations in their favor.