Dark Web: Inside the Internet’s Underworld

March 20, 2024 by Verafin

Dark web
“Injustice anywhere is a threat to justice everywhere.” 
– Martin Luther King Jr.

The cloak of anonymity can be used to protect someone from scrutiny or to conceal the worst human behavior imaginable. The dark web, originally conceived to allow users to communicate anonymously, is a case in point where concealment can be used for darker purposes. The dark web provides a venue, whether explicit or disguised, for criminal activity that threatens the fabric of our financial system and undermines our communities everywhere. In our blog, we reveal the history of the dark web, from its origins in government research to use as a haven for crime — and how working together is key to justice. 


The dawn of the internet age brought with it research to harness this newfound technology for anonymous communication. The American military, through the U.S. Naval Research Laboratory, built on Cold War research to develop the The Onion Router or ToR, special software designed to obfuscate users’ web traffic. Released in 2002, ToR would soon become the gateway to the dark web. Much like the research that spawned it, which enabled the first illegal online transaction — a drug deal by Stanford students — it would also be abused by criminals. 

ToR: Laundering Internet Activity

ToR’s namesake references its ability to create layers that obfuscate who originally performed an action, such as an internet search. It does so by routing a user’s web traffic through many other users’ computers — essentially laundering the internet activity. In much the same way that laundering cash obscures the money trail, ToR makes tracing internet activity back to the original user highly challenging. This capability has made ToR a default access point for the dark web and the activities within it. 

Accessing The Depths of Internet

The reference to an onion also reinforces the concept of a layered structure which is how the internet is designed to operate. Overall, the internet exists in three layers: 

  1. Surface Web. Content that is indexed and searchable within Google and other web browsers, resides in this uppermost layer. 
  2. Deep Web. Existing beneath the surface web, the deep web includes corporate intranets and other databases that require special permissions and cannot be accessed with normal search engines.  
  3. Dark Web. The dark web is a special portion of the deep web that is intentionally hidden — and ToR is the key to accessing it. Using concealed identities, users can publish content on the dark web with relative anonymity. 

In the right hands, the power of anonymity on the dark web can enable free speech in oppressive regimes and protect classified government activity from discovery. But for others, the temptation of acting with impunity within the dark web has provided an avenue to create an underworld with thriving marketplaces for contraband and hubs for the most heinous content imaginable. 

The Dark Side: Underworld Marketplaces

“The dark web’s anonymity not only encourages illegal activities, it keeps many law enforcement agencies largely unaware of its existence, even while their jurisdictions are impacted by online transactional crimes.”
National Institute of Justice, 2020

From the sale of illegal substances to stolen banking information and all manner of exploitative materials, the dark web facilitates markets for some of the vilest commodities on earth while generating enormous profits. Hydra Market, a once prominent destination for illicit goods on the dark web, is just one example — receiving over $5.2 billion in cryptocurrency before its closure. 

Illegal transactions taking place within the dark web are not bound by laws or regulations and can transpire across international boundaries, undermining the global financial system by catalyzing fraud, money laundering and more. The anonymous nature of the dark web provides a haven for criminals to sell personally identifiable information (PII) giving them the access they need to bypass authentication measures at financial institutions to commit fraud, resulting in losses for customers and institutions. Monetary instruments obtained from dark web marketplaces can easily be laundered — in one case a group of criminals conspired to buy over 200,000 stolen credit card numbers, use the numbers to purchase consumer products, and sell those products for cash. 

Uniting Against Hidden Threats

Criminals will always lurk in the shadows. As an industry, we must work together to expose them. A network of financial institutions united with a collaborative approach to financial crime investigations poses a greater threat to criminal networks than a single financial institution alone. 

For over 20 years, Verafin has developed solutions that enable financial institutions to work together and fight crime. Our innovative technology and collaborative approaches powered by industry-level data provide the collective insights necessary for financial institutions to overcome the challenges in protecting the financial system from evolving financial crime threats and effectively fight fraud, money laundering, and heinous predicate crimes such as human trafficking and terrorist financing. 

For more on the dark web and how your institution can combat related crimes, read our recent blogs on identity exploitation and dark web markets for PII. 

Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3800 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

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