Saying it was the world's largest international money laundering prosecution in history, authorities announced charges against the operators of Liberty Reserve, an online currency exchange that prosecutors say enabled more than a million people worldwide to launder about $6 billion.

Bloomberg reports:

"The company, incorporated in Costa Rica in 2006, operates 'one of the world's most widely used digital currencies,' prosecutors said today. Through a website it provides users with the ability to send and receive payments globally, they said.

"In fact the company was created and structured 'as a criminal business venture, one designed to help criminals conduct illegal transactions and launder the proceeds of their crimes,' according to a grand jury indictment filed by prosecutors in the office of U.S. Attorney Preet Bharara and unsealed today in U.S. District Court in Manhattan."

The big sticking point, reports The New York Times, is that the website allowed people to make financial transactions anonymously and without the possibility of tracing them.

Speaking to a "senior law enforcement official," the Times reports that investigators were able to "register accounts under names like 'Joe Bogus' and describe the purpose of the account as 'for cocaine' without questioning."

All the website required in order to activate an account was an email address. The official quoted by the Times described the site as a "PayPal for criminals."

The Wall Street Journal reports that Liberty Reserve asked its clients to first go through a third party to exchange traditional currency for Liberty Reserve currency and that allowed them to operate without a "financial paper trail."

The newspaper reports that authorities have arrested five men in connection with the charges.

Update at 4:29 p.m. ET. Widely Used By Criminals:

In its press release, the Treasury Department says that Liberty Reserve was "specifically designed and frequently used to facilitate money laundering in cyber space."

Brian Krebs, who has been writing about these kinds of issues for years, writes on his blog that while criminals did use this service, "certainly not everyone using Liberty Reserve was involved in shady or criminal activity."

Krebs also says that this is part of a larger effort by the U.S. He explains:

"In tandem with the unsealing of the indictments against [the company's founder Arthur Budovsky] and others, Manhattan District Attorney Cyrus R. Vance, Jr., announced the formation of the 'Financial Intelligence Unit' — a group that will work with the FBI, IRS and Secret Service to more closely scrutinize suspicious activity reports filed by U.S. financial institutions."

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