12 September 2024
Basel Institute on Governance (2024) ¦ How Crypto Assets are being used for Organised Crimes inc. Trafficking of Humans, Drugs and Migrants
How crypto assets are being used for organised crimes including human trafficking, migrant smuggling and drug trafficking
Panel at the 8th Global Conference on Criminal Finances and Cryptocurrencies examined how crypto assets are being used by organised criminal groups to facilitate human trafficking, migrant smuggling and drug trafficking. Moderated by Fabrizio Fioroni (UNODC), the panel included Tarana Baghirova (OSCE), Scott Johnston (Chainalysis), Adedeji Owonibi (A&D Forensics) and Ronnie Francis Cariaga (Philippine National Police, Anti-Cybercrime Group). The discussion explored investigative challenges and opportunities, whether responses are keeping pace, and how jurisdictions can improve cooperation and capacity. Why this matters now Criminal networks have adapted rapidly to digital payments and virtual asset services. The adoption of crypto is not confined to cybercriminals: drug networks, traffickers and organised fraud rings increasingly use crypto for payments, to move value across borders, and to try to conceal proceeds. At the same time, digital traces on blockchains create investigative opportunities that were not available with cash alone. The problem therefore combines operational complexity, legal and regulatory gaps, and the urgent needs of victims whose protection can require recovered assets.
Key investigative challenges
One dominant challenge is victim-centred complexity in trafficking cases. Human trafficking investigations depend heavily on victim testimony, but many victims are traumatized, fearful of return or criminalized for acts they were forced to carry out. This undermines prosecution prospects and makes financial follow-up harder. The online shift in recruitment, control and exploitation increases reliance on digital evidence; investigators must be able to collect, preserve and present such evidence so courts will accept it.
A second set of challenges is institutional: expertise, coordination and resourcing. Many law enforcement agencies still treat crypto primarily as a cybercrime issue. That institutional placement creates gaps when cases with significant crypto elements are handled by non-specialist teams focused on drugs, smuggling or trafficking, and the crypto intelligence is overlooked. Training gaps are widespread: many investigators and prosecutors lack basic operational skills to trace, interpret and use blockchain evidence. Silos between units, and between public and private sectors, reduce the impact of available tools and intelligence.
Legal and procedural obstacles slow action even when traces are found. Exchanges and custody providers may require specific legal channels or court orders in particular jurisdictions, and cross-border mutual legal assistance can be slow or blocked by differing laws on virtual assets. Regulatory arbitrage also creates safe havens where proceeds can be converted or stored with fewer controls.
Operational tactics used by criminals
Panelists identified several recurring uses of crypto by organised crime:
- Payments for illicit online services, including live-streamed sexual exploitation and online fraud marketplaces. Research and reporting show crypto is commonly offered as a payment method on commercial child sexual abuse platforms.
- Informal value transfer and onward laundering: crypto can be used to move value rapidly across borders, substituting for cash-based money laundering methods and traditional informal value transfer systems.
- Attempts to anonymize proceeds using privacy coins and mixers, although these can sometimes be traced with specialist analytics.
- Setting up crypto-related businesses — for example, mixing services or mining pools — to integrate illicit funds into seemingly legitimate operations.
Opportunities for investigators
Blockchain transparency is a powerful investigative asset when properly exploited. A public ledger provides persistent traces that, combined with on- and off-chain intelligence, can reveal networks, service providers and counterparty relationships. Proactive use of blockchain analytics can uncover major users or hubs of illicit activity before crimes are fully realized, widening the scope of operations and enabling targeted legal action. Recoveries of crypto assets, where feasible, can provide funds to support victim care, repatriation, or prosecutions.
The panel stressed that recovering value often matters more than seizing physical contraband, because financial disruption can disable criminal business models and deter opportunistic offenders. Practical examples cited include smart-contract mechanisms and asset freezes that were used to secure millions in crypto during major cases.
Are we behind the curve?
Responses varied but converged on a realistic assessment: in some respects yes, in others no. Specialist cyber and blockchain teams in many jurisdictions are capable of complex work and have achieved significant results; in those pockets, law enforcement can match or exceed criminal capability. Yet in the broader criminal justice context—where trafficking, smuggling and drug investigators may not routinely integrate blockchain analysis—opportunities are missed. Typical scenarios include major drug seizures or raids on scam centres that neglect linked crypto addresses, leaving intelligence and recoverable value unexploited.
Criminals are agile and exploit jurisdictional weaknesses. They move operations to regions with weaker regulation, use peer-to-peer exchanges and private counterparties, and recruit locally or regionally where economic conditions make recruitment into criminal enterprises easier. This combination of adaptability and regulatory arbitrage means that even capable investigative teams can be frustrated by cross-border legal barriers or by service providers that require foreign court orders to release records.
What works: concrete approaches to get ahead
Effective responses rest on three mutually reinforcing pillars: capability, cooperation, and regulatory clarity.
Capability: Equip investigators and prosecutors with practical blockchain skills and forensic tools, and ensure those skills are embedded in teams that handle trafficking, smuggling and drug cases, not siloed only within cyber units. Training should be pragmatic, showing how blockchain traces link to real-world evidence and prosecution strategies.
Cooperation: Deepen and normalise public-private partnerships. Private analytics firms and compliant service providers can supply rapid, actionable intelligence that complements law enforcement powers. Nationally, multi-agency task forces that include cyber specialists, trafficking investigators, financial crime teams and victim protection services improve case outcomes. Internationally, faster, more flexible channels for cross-border evidence sharing are essential; mutual legal assistance processes must be modernized for virtual asset realities.
Regulation and procedure: Harmonize laws to recognise virtual assets as property or proceeds and to standardize requirements for service providers to respond to lawful requests. Where exchanges operate across borders, clarify lawful disclosure channels so investigators are not forced into ineffective or delayed routes. Address custody and confiscation frameworks so confiscated crypto can be securely held and converted for victim support or restitution.
Victim protection and prosecution balance
Investigations must remain victim-centred. Many victims in scam operations and forced criminality occupy dual roles as both victims and criminally implicated actors. Proper screening, victim support and legal frameworks that distinguish coercion from volitional criminality are essential to obtain evidence and secure prosecutions of organisers. Financial investigations often depend on victim cooperation; therefore, prioritizing protection and assistance converts victim accounts into stronger cases and prevents perpetrators from escaping accountability.
Regional insights and trends
Southeast Asia and the Philippines were highlighted for large scam centres and significant victim counts; operations can involve hundreds of victims per site, creating acute protection and resource challenges. Africa is experiencing its own growth in crypto-facilitated illicit activity, including peer-to-peer markets that enable rapid conversion and cross-border flows. Criminals target jurisdictions with regulatory gaps and unregulated service channels; jurisdictions with weak oversight or unclear legal frameworks are at risk of becoming hubs for laundering and conversion. The wildlife and timber trafficking communities are also adopting crypto to facilitate illicit trade and cross-border payments.
Practical next steps
Short-term actions that produce practical gains include:
- Embedding blockchain analysts into non-cyber investigative teams and ensuring investigators know how to preserve and prioritise crypto traces.
- Strengthening trusted public-private channels with clear, secure processes for sharing tactical intelligence and for obtaining records from compliant providers.
- Investing in regional training programs and cooperative task forces, so countries with resource constraints gain access to specialist support.
- Updating legal frameworks to treat virtual assets consistently with other forms of property and to streamline lawful access to exchange records.
- Creating protocols for custody and conversion of seized crypto so recovered assets can be used for victim support or restitution.
Conclusion
Crypto assets are being used across organised crime typologies, from live-streamed sexual exploitation to migrant smuggling, scamming networks and drug distribution. The technology both creates new vulnerabilities and offers new investigative tools. Success depends less on stopping technological change and more on building capacity, cooperation and clear legal paths that turn blockchain transparency into prosecutorial and victim-support outcomes. Where countries and agencies invest in practical skills, coordinated partnerships and up-to-date legal frameworks, they can regain initiative and convert crypto traces into accountability and relief for victims.