Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.In 2017, a Colombian homeowner broke through an interior wall of his property and found a hidden chamber within. Complete with its own canteen and bathroom, the fetid bolt-hole was deserted save for a mound of what seemed like rotting paper. It was only when the owner rummaged through it that “he realized what he was touching: the remnants of approximately $18mn in cash”.Such stranded stashes are an occupational hazard of organised crime. The Medellín bolt-hole had been constructed for the notorious drug lord Pablo Escobar (the homeowner was his nephew Nicolás). Showered with untold billions, Pablo’s problem had been how to launder it through the local banking system and turn bulky stacks of grubby greenbacks into usable clean cash. It was a challenge he only partially mastered prior to his death in 1993. Hence the pile of perished notes.Escobar, of course, inhabited an analogue world where cheques, cards and cash were the principal media of money transactions. Now technology has opened new ways to move the stuff, and it is this alliance of Silicon Valley wizardry and crime that is the subject of Geoff White’s new book Rinsed. A one-time technology correspondent, White had a hit a couple of years ago with The Lazarus Heist, a book about a group of North Korean hackers. Now he turns his attention to cyber crime and how the Silicon Valley technology helps launder dirty cash. The beauty of digital currency lies not just in its anonymity, but its flexibility and access to deep global markets, as opposed to the diddly local banks Escobar had to deal withTo explore how this plays out, White leads the reader through the three discrete stages of any money-laundering operation. First there’s “placement”, which means not leaving your cash rotting in hidey-holes but finding a way to inject it into the financial system. There it must be mashed together with legitimate cash flows — a process known as “layering” — before the laundered proceeds can be used to purchase apparently innocent assets. These are the stores of value that make crime pay.Technology has made all this easier — and much more scalable. The beauty of digital currency lies not just in its anonymity, but its flexibility and access to deep global markets, as opposed to the diddly local banks Escobar had to deal with. Payments can be sliced up and slipped into millions of digital wallets, their sheer volume rendering any tracing much more difficult. So-called “mixers” — computer programs that slosh together covert and innocent digital currency — obviate the need to wash funds laboriously through the bookies or some cash business. Technology permits distance: you can run your dodgy operations from almost anywhere in the world — and far from where the crimes are actually taking place. And the so-called dark web permits criminal IT suppliers, hacking gangs and fraudsters to create alliances discreetly online.The result is a large, increasingly connected illicit economy, where dark web online marketplaces such as the Russian Hydra drug-dealing website operate as criminal parodies of eBay or Amazon. Nigerian gangs such as Black Axe operate globally, pulling “advance fee” scams (where a fictional prince, say, wants to share his inheritance), computer-locking ransomware or “business email compromise” where the game is to trick a company into making apparently legitimate payments into a bogus account. Repeat and (hopefully) rinse is the objective. Unlike drug-dealing, with its complex logistics, these are opportunistic capital-light operations. As one police officer puts it: “BS is cheap, it’s abundant, it’s infinite.”As with any good cops and robbers saga, the criminals don’t have it all their own way. Tech also enables the good guys to come after them, and White’s stories focus on the techniques detectives use to stalk their cyber prey. Even Bitcoin is traceable if you follow the digital breadcrumbs through the public blockchain ledger. Technology can never quite eliminate human fallibility: the weak link in most frauds. The most sophisticated bank scams can end up with so-called “money mules” queueing at ATMs to withdraw the swag in dollar or euro bills. The precipitous decline in burglary — down by 86 per cent in England and Wales over the past 30 years — shows how much crime has now migrated online. After all, why risk your neck breaking into someone’s property when you can rob them from your desk with the click of a mouse? White’s detailed reporting lays bare this new tech-enabled world; taking us through the nuts and bolts of each con and heist.Bitcoin is traceable if you follow the digital breadcrumbs through the public blockchain ledgerIt’s sometimes quite involved, and he has the annoying didactic tic of periodically recapping for the reader of what he has just told them. But the sheer effrontery of some heists is riveting, such as the ransomware attack that took down Colonial Pipeline, a US fuel supplier, and almost led to petrol shortages across the US. The rewards are also getting bigger, as shown by the 2022 crypto-heist from a Singapore-based gaming company Sky Mavis, which netted an astonishing $625mn. What made that even more sinister was that the technology used to wash the crypto was the equivalent of a driverless car: an autonomous mixer with no controlling owner. It was the perfect technocratic crime and much of the loot was never recovered.While these stories are gripping, Rinsed leaves a hanging question: what to do about all this misused innovation? White doesn’t really have an answer. “We can’t stop tech creators from pushing at the boundaries — and, arguably, we wouldn’t want to,” he says. The best hope then is that the good guys win the tech arms race and keep the criminals at bay. That is not a given. Many of the worst crimes originate in jurisdictions where the authorities appear either to turn blind eyes, or actively connive in such criminal activity — countries such as Russia and North Korea. Sovereign impunity makes the law enforcer’s job much harder — whatever the heft of technology they deploy. Ultimately, Rinsed is a story about powerful, amoral systems and how they can be used or misused. It’s also a warning of what might happen should nations ever turn their hands to all-out cyber war.Rinsed: From Cartels to Crypto: How the Tech Industry Washes Money for the World’s Deadliest Crooks by Geoff White Penguin Business £20, 288 pagesJoin our online book group on Facebook at FT Books Café and subscribe to our podcast Life & Art wherever you listen
