.svg)
Greater powers for the UK’s National Crime Agency (NCA) and police to seize, freeze and destroy crypto-assets used by criminals came into force on Friday (April 26).
The government has introduced updates to legislation governing the proceeds of crime and terrorism, designed to enhance law enforcement agencies’ ability to investigate, seize and recover illicit crypto-assets effectively.
Among the changes, police officers will be empowered to transfer illicit crypto-assets into electronic wallets under law enforcement control, or to destroy crypto-assets deemed not conducive to the public good.
This provision, particularly targeting privacy coins notorious for facilitating money laundering, reinforces efforts to maintain the integrity of the financial system.
“Criminals should never be able to benefit from breaking the law which is why we are making it much easier for law enforcement to stay on top of a new and developing threat,” said James Cleverly, the UK’s Home Secretary.
Victims of crypto-asset-related crimes will also be given the opportunity to apply for the release of funds held in crypto-assets accounts, with the government suggesting that this mechanism will ensure that victims can reclaim funds rightfully belonging to them, thereby strengthening the justice system's response to such crimes.
Law enforcement officers have also been empowered to seize crypto-assets from suspects without the necessity of making an arrest, and to seize items that could furnish crucial information for investigations, such as passwords or memory sticks.
“The economic crime threat is continuously growing and evolving with criminals exploiting advances in technologies like cryptocurrency,” said Adrian Foster, chief crown prosecutor. “Crypto-assets are often used by criminal gangs to launder their criminal profits internationally at the touch of a button.”
Foster said it is “vital” that investigators and prosecutors have the capability and agility to keep pace with this changing nature of crime.
“These new measures will greatly assist our ability to restrain, freeze, or eliminate crypto-assets from illegal enterprise.”
Use cases
These crypto reforms will enhance national security, Cleverly said. “Terrorist organisations like Daesh are known to raise funds through crypto transactions and these updated powers will enable our agencies to more easily strip them of their assets.”
So far, a small number of counter-terror investigations have found that terror groups are using crypto to raise funds.
In 2021, a British man was sentenced to 12 years’ imprisonment after he used Bitcoin to send around £55,000 to ISIS, also known as Daesh.
Meanwhile, the NCA’s National Assessment Centre estimates that illicit crypto transactions linked to the UK are likely to have reached at least £1.2bn in 2021, if not significantly higher.
For example, crypto-assets were seized in a UK case where three men sold counterfeit drugs on the dark web and accepted crypto as payment, amassing £750,000 in the process.
In a separate case, HM Revenue & Customs (HMRC) seized three non-fungible tokens (NFTs) as part of an investigation into VAT fraud, with three people arrested on suspicion of attempting to defraud the agency of £1.4m.
“Criminals are increasingly using crypto-assets to conceal and move the proceeds of crime at scale and pace, pay for other criminal services and as a means to defraud victims,” said Adrian Searle, director of the National Economic Crime Centre.
Searle welcomed the new rules, stating that they “will enable a more effective pursuit of the criminals and ultimately deny them the financial gain they crave”.
