Can economic sanctions lead to fraud?

Countries routinely use sanctions on nations to deter and penalize bad behavior. But what if economic restrictions cause criminals to seek the anonymity of alternative currencies? We possibly could see increases in fraud, money laundering and terrorist financing. Or not. The jury’s still out. Here’s what fraud examiners and law enforcement can do as nations move to their own parallel virtual and traditional monetary systems.

The perpetrator of an $80 million Ponzi scheme needed to launder his dirty money, so he funneled the cash through a Denver online virtual currency exchange backed by established American venture-capital firms, according to a Wall Street Journal investigation. (See “How Dirty Money Disappears Into the Black Hole of Cryptocurrency,” by Justin Scheck and Shane Shifflett, The Wall Street Journal, Sept. 28, 2018.)