While Bitcoin and other cryptocurrencies are being increasingly used by criminals, the open nature of blockchain technology provides also provides authorities with a "key" new way to tackle organized crime.
This was the general consensus among crypto specialists and financial investigators who last week gathered for the 6th Global Conference on Criminal Finances and Cryptocurrencies in The Hague hosted by Europol with the support of the Basel Institute on Governance
According to the speakers, who represented European regulators, law enforcement, and experts from crypto exchange Binance, as well as blockchain sleuths Chainalysis, CypherTrace, and TRM Labs, the use of cryptocurrencies is expanding ”into practically every country and sector,” facilitating new forms of crime.
Collaboration is key when it comes to investigating & prosecuting crypto-enabled crimes & money laundering.
To increase this cross-sector approach, Europol organised the 6th annual Global Conference on Criminal Finance & Cryptocurrencies #6CRC.
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— Europol (@Europol) September 2, 2022
Examples of illicit activities where crypto has been used include drug smuggling, match-fixing in sports, and financing of manufacturing, acquisition, possession and export of weapons of mass destruction.
Additionally, there is a growing number of professional money launderers who take advantage of the options provided by digital assets to launder proceeds from both physical and cyber crimes.
Yet, referring to the pseudonymous nature of most blockchain networks and the ability to track—to a certain extent —cryptocurrency transactions, the speakers also agreed that "these unique characteristics “offer an unprecedented opportunity” to investigate organized crime and money laundering networks and to eventually recover stolen funds.
Tackling organized crime, however, will also require “the right tools, capacity and cooperation,” said the experts.
Staying ahead of crime
According to Europol, all parties involved in combating crime, such as law enforcement, regulators, and the private sector, “are working hard to stay ahead of those who abuse crypto assets to commit crimes and launder money.”
The organization also counts on new European legislation to “ensure that crypto assets are treated like any other assets for the purposes of anti-money laundering regulation and supervision.”
The new rules, finalized in June this year, will require service providers, such as crypto exchanges, to collect and store information identifying people involved in crypto transactions, as well as hand the information over to authorities that are conducting investigations.
The new regulations, however, will not impose the tracking requirements on private, unhosted wallets that the EU Parliament initially planned in March.
Nonetheless, as law enforcement and judicial authorities increasingly treat cryptocurrencies like any other asset from a legal perspective, seizure, management, and eventual conversion of cryptocurrencies into fiat money is now becoming a much easier task, said Europol.