The Joint Chiefs of Global Tax Enforcement (J5) has issued new advisories linking cryptocurrency over-the-counter (OTC) trading desks and payment processors to hundreds of billions of dollars in suspicious financial activity. The J5, a coalition of tax authorities from five nations, reported that OTC desks see average daily volumes of $1.44 billion and are being used to obfuscate funds by criminals and tax evaders. The group warns these platforms are difficult to monitor in real-time, creating a significant layer of risk for illicit financial flows into traditional systems.
The Joint Chiefs of Global Tax Enforcement (J5) published advisories warning that cryptocurrency over-the-counter trading desks and payment processors are being used to move funds tied to criminal activity. The group stated that nearly $236 billion in suspicious activity has been reported to the Financial Crimes Enforcement Network connected to these platforms.
OTC desks, which facilitate private trades, have an estimated average daily trading volume of $1.44 billion according to the J5. The group said these desks provide anonymity for moving large sums, potentially functioning as an obfuscation tool for tax evaders and money launderers.
Law enforcement faces challenges because OTC desks are not identified in many commercial blockchain analysis tools. “Despite facilitating billions in daily transactions, the majority of OTC desks may not be filing suspicious activity reports to mitigate the risks associated with the sheer volume of cryptocurrency being exchanged,” the J5 stated.
Regarding payment processors, the J5 noted a more than 1,000% increase in related suspicious activity reports from 2020 to 2024. These processors, which allow purchases from luxury brands like Rolls-Royce and Ferrari, had $5 billion in suspicious activity reports filed to FinCEN.
Some jurisdictions are taking regulatory action, such as Hong Kong introducing a new regime for OTC desks this year. This follows the 2023 collapse of the JPEX exchange, which revealed a lack of oversight for the city’s many OTC storefronts.
A representative from OKX emphasized industry efforts, stating, “We strongly support law enforcement in cracking down on illicit crypto activity, including misuse of OTC channels.”
