Abstract

This study aims to examine gaps in the current AML framework related to cryptocurrency and digital assets. We focused on money laundering typologies involving the conversion of illicit funds into clean value through cryptocurrency-based purchases of vouchers, gift cards, and other non-traditional instruments. We examined the existing literature on cryptocurrency and digital assets to identify gaps in detection and classification by mapping platform features and transaction pathways using an original dataset. The work adopts the Placement Layering Integration model. It conceptualises a laundering pathway that operates outside regulated intermediaries via crypto acquisition, voucher purchases on low Know Your Customer (KYC) platforms, redemption into goods, and informal resale for cash. The analysis revealed that most platforms required minimal verification for transactions, and many supported privacy coins that can hide the flow of funds from standard detection techniques. These features create conditions for cross-border money transfers that may fall outside law enforcement oversight. Such mechanisms can lead to undeclared remittance and potential tax evasion. This study contributes to the understanding of cryptocurrency related financial crime within broader money laundering typologies. It contributes to AML frameworks by identifying a shadow payment architecture, proposing targeted reforms to extend AML coverage to voucher intermediaries, and highlights areas for future research and policy improvements.

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