Important facts:
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The study acknowledges that the use of cryptocurrencies in crimes against migrants is not yet widespread.
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They are calling on authorities to uncover unusual behavior by Chivo Wallet users.
A report presented by Global Financial Integrity (GFI), a US-based think tank, warns about the possible use of the Chivo wallet in crimes related to migrant trafficking.
According to the study titled “Strengthening Financial Integrity and Transparency,” the most common crime risks in El Salvador have to do with electronic wallets for cryptocurrencies. They refer specifically to the Chivo Wallet, a wallet created in 2021 by the government of Nayib Bukele as part of the adoption of Bitcoin (BTC) as legal tender.
According to research by GFI, which typically produces comprehensive analyzes of illicit financial flows, this is the Chivo Wallet has the potential to be used to make or receive payments intended for migrant trafficking. Mainly because its configuration facilitates interoperability with the US dollar banking system.
“There is also a risk that proceeds from large-scale migrant smuggling could be laundered into the crypto-asset ecosystem,” they note. This is because customer identification (KYC) requirements are minimal, especially for legal entities.
A common crime in El Salvador is migrant smuggling. It is therefore important to identify and mitigate the risks of this underlying crime across a variety of sectors, including banking and more recently cryptocurrencies.
Global Financial Integrity Report
The biggest fears raised in the report relate to the risks involved to use Chivo ATMs at the Mexico-United States border to deposit contraband or receive payments.
They specifically refer to the group of machines located in places such as San Diego (California), El Paso (Texas), Nuevo Laredo (Texas), and McAllen (Texas). They were installed in these locations in September 2021, shortly after the passage of El Salvador’s Bitcoin law, as CriptoNoticias reported at the time.
It’s about places where greater risks exist, taking into account that payments are normally made in these border areas. Most importantly, there is a large payment that migrants make upon arrival in the United States or immediately thereafter, which is difficult to pay in cash.
However, until now No transactions were identified of the Chivo Wallet related to migrant-related criminal activity. They believe that this circumstance is due to the lack of adequate monitoring, which is why they are calling on the authorities to make more efforts to detect unusual behavior by users of the Salvadoran wallet.
Therefore, it is recommended that El Salvador update the guidelines for using the Chivo wallet and adopt reforms that strengthen anti-money laundering and terrorist financing regulations.
In this sense, researchers are observing an increase in the use of cryptocurrencies in migrant trafficking, extortion, goods smuggling and embezzlement. Although they admit that This payment method has not yet become widespread.
As part of its conclusions, the GFI echoes the criticism leveled at the Chivo wallet and reiterates the problems that many in El Salvador have already denounced and caused The wallet has little use. These include various operational disruptions and several cases of identity theft.