Drugs, the Internet, Money-Laundering and Shell Companies

Tom Bergin

• Online Drug dealing• Internet Payment Systems• Shell companies

Drug dealing online

• “FBI shuts alleged online drug marketplace, Silk Road”

• “Silk Road: The eBay of Illegal Drugs”• “After Silk Road's demise, online drug dealing

moves to new sites”

Source: Reuters, WSJ, The Verge

Life cycle of online drug market•Early 2011 – Silk Road begins operations•March 2011 – Gawker reports on the site.•June 2011 – U.S. Senators ask Attorney General to crack down on Silk Road•Nov 2011 – Secret Service co-operating with overseas agencies on investigation•Oct 2013 – FBI shuts Silk Road

Challenges of online drug dealing

• Secrecy• User Confidentiality• Traceability of shipments• Trust

Internet payment systems

Liberty Reserve“'Black Market Bank' Accused of Laundering

$6 Billion” – ABC News

Liberty Reserve

Mr. A Money

Ex. Bank Mr. B MoneyEx.

Account A Account B

LRsLRs

LRs

Online Money Exchange

(Unregulated)Bank

(Unregulated)

B Co. (Caribbean)

Ltd.

OnlineMoney

Exchange (Regulated)

Technocash concedes 'one got through net' - The Australian

Shell Companies