Approximately $400 billion is laundered each year in Latin America through activities such as corruption, tax evasion, drug trafficking, human trafficking, and the use of shell companies.
Although efforts to combat money laundering has improved over the years, progress remains uneven across the region. Countries collectively still rank below the global average according to the Basel 2025 Index, which measures the risk of money laundering and terrorist financing across 177 jurisdictions. This uneven process continues to create operational vulnerabilities that criminal networks exploit across borders.
Haiti ranks second in this classification, while Costa Rica, Suriname, Barbados, and Nicaragua have seen their scores worsen compared to previous years. Nicaragua’s case is emblematic: Since 2017, large sums of money linked to drug trafficking have been regularly seized in the country, though their final destination remains unknown. In 2020 alone, the amount reached $10.5 million. These persistent gaps highlight ongoing challenges in tracing financial flows and ensuring accountability across jurisdictions.
Decentralized finance
In Latin America, where access to the banking system remains uneven, so-called decentralized finance (DeFi) has had a dual effect. On the one hand, it has expanded financial inclusion, allowing even underserved populations to carry out financial transactions. On the other, it has proven highly attractive to organized crime. This model operates without banks or traditional intermediaries, enabling direct transactions between users through technologies based on decentralized digital ledgers, known as blockchains.
This virtual ecosystem, built around cryptocurrencies, allows organized crime to move the proceeds of illicit activities globally with greater speed and reduced risk of detection. “International criminal organizations, with the support of industry specialists, are now able to combine the anonymity or pseudo-anonymity of cryptocurrencies with the services offered by decentralized finance to conceal the origin of illegal funds and the identity of the true perpetrators,” Paolo Aprile, an Italian expert in money laundering and financial crime prevention and founder of the specialized magazine Dirty Money, explained to Diálogo.
This dynamic also fosters convergence among different illicit actors, including terrorist organizations, which increasingly rely on the same financial channels. In Brazil, for example, in 2025, Operation Hydra revealed how a fintech company linked to the country’s main criminal group, the First Capital Command (PCC), had used digital wallets associated with 15 cryptocurrencies later sanctioned by Israel for receiving funds intended to finance Hezbollah. One of the users identified in connection with these networks was Mohamad Khir Abdulmajid, currently wanted by Interpol for planning a series of terrorist attacks in the South American country. According to investigations, Abdulmajid allegedly sent $82 million in cryptocurrency to Lebanon using a digital wallet linked to the same financial ecosystem.
Anonymity
At the core of this opacity is what is known as layering — the fragmentation of funds through rapid transfers between digital wallets and across multiple platforms, often located in different jurisdictions. “Since these platforms frequently operate transnationally and do not always fully comply with anti-money laundering regulations, a service banned in one country can continue to operate in another,” Aprile said.
Among the most concerning tools are so-called crypto mixers. According to the expert, “they are tools designed for money laundering, as they mix cryptocurrencies from multiple users, breaking the link between sender and recipient, and then redistribute equivalent sums to new addresses, making the transactions virtually impossible to trace.”
In 2025, in Chile, Operation Tren del Mar dismantled a network linked to the Tren de Aragua that had laundered $13 million through cryptocurrencies transferred abroad, concealing their origin. Cases such as this illustrate how digital tools are increasingly integrated into transnational criminal operations.
Dark web and artificial intelligence
On the dark web, cryptocurrencies are often used to purchase illicit goods. Among the most widely used is Monero, a so-called privacy coin, as it guarantees a high level of anonymity: The sender is concealed thanks to ring signatures, which mix the transaction with those of other users. The recipient is also anonymized through stealth addresses —unique, temporary addresses generated for each payment — while even the transaction amount is encrypted.
In February 2026, Brazilian police dismantled a criminal network that purchased 3D-printed guns on the dark web using cryptocurrencies. The leader was Lucas Alexandre Flaneto de Queiroz, a well-known Brazilian designer of 3D-printed guns, widely known as Zé Carioca.
Additionally, an increasing number of generative AI tools, similar to ChatGPT, are emerging on the dark web. “These tools allow users to make requests with few restrictions, generate fake documents, obtain manuals for committing cybercrimes, or codes for hacking servers,” Aprile explains. According to the expert, AI tools on the dark web also provide operational guidance for laundering illicit funds, suggesting methods to circumvent controls and regulations in different countries.
Online gaming and betting platforms
The final stage of the money laundering process — converting cryptocurrencies into cash — is rarely carried out directly and typically involves intermediary platforms. Criminals can, for example, acquire non-fungible tokens (NFTs) — unique digital assets with identifiable ownership — which can then be resold, even to legitimate buyers, helping to “clean” the origin of the funds.
Alternatively, secondary platforms such as online video games are used — a sector that has undergone a profound transformation in recent years. What were once systems based on predefined challenges have evolved into interactive ecosystems where users can make personalized purchases using virtual currencies to enhance in-game performance.
“This evolution has favored the spread of pay-to-win models and the creation of unregulated e-commerce markets for virtual items, whose value is determined by the interplay of supply and demand. Consequently, these markets can be used to conceal payments related to drug trafficking or the sale of weapons, under the guise of virtual goods exchanges,” Aprile said.
Criminals can open multiple accounts using fake identities, make purchases without raising suspicion, and move funds across multiple jurisdictions, taking advantage of the lack of regulatory oversight.
Furthermore, many modern video games allow real-time voice or chat communication. According to the expert, these features can be used to organize criminal interactions that are difficult for investigators to interpret, as they are seemingly justified within the context of the game — particularly when the in-game activities themselves are illicit.
Both Italian and Chinese criminal organizations are exploiting online gaming and betting platforms to launder money. In Brazil, for example, according to the Instituto Brasileiro de Jogo Legal, at least 40 percent of betting sites are illegal. Many of these operations are linked to Chinese mafias and operated out of China.
The vulnerabilities
Much of Latin America lacks sufficient robust banking regulations and Know Your Customer (KYC) requirements, which are essential for verifying users’ identities. At the same time, efforts to regulate cryptocurrencies remain in relatively early stages. Oversight of virtual asset service providers (VASPs) — entities that convert traditional currency into cryptocurrencies — also remains limited and uneven, creating additional exposure points.
Another key vulnerability lies in corporate transparency. A recent report by the Washington-based think tank Global Financial Integrity notes that more than 72 percent of countries in Latin America and the Caribbean maintain registries of companies’ ultimate beneficial owners. However, the effectiveness of these registries is often limited by weak verification mechanisms and gaps in implementation.
Across the region, challenges persist — particularly in verifying submitted information and ensuring consistent coverage — which can facilitate anonymity in cross-border financial transactions.
Another challenge is tracing the origin of funds. “Individuals with large amounts of capital use multiple intermediaries, which makes it difficult to reconstruct the flows, especially in the absence of information sharing among institutions,” Aprile says.
Addressing these vulnerabilities, the expert emphasizes, is a fundamental step toward strengthening the effectiveness of systems for preventing and combating money laundering in Latin America. For authorities, this increasingly requires not only regulatory adaptation, but also enhanced coordination, information sharing, and technical capacity to track financial flows across digital and jurisdictional boundaries.
