New Scientist - USA (2022-01-08)

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Greater Manchester Police

force has hired staff to

recover cryptocurrency

request – to seize an undisclosed

amount of bitcoins.

When cryptocurrencies

are stored on an exchange,

they effectively stop being

decentralised. The exchange

itself owns the coins, and simply

manages them for the customer.

So police can ask the companies

that run the exchange for

information or funds. Of course,

criminals don’t always use

exchanges, and can hold coins

themselves entirely anonymously.

Soon, the Proceeds of Crime Act

will also be updated to categorise

cryptocurrencies as cash, rather

than property, which will give UK

police stronger powers. The act

was created to bring an end to

the situation in which organised

criminals could use cash, gold or

expensive watches as currency

and were safe from prosecution

as long as they weren’t caught

committing a crime. Cathcart

hopes that an update will

again enable a crackdown.

“The days of criminals turning

up in Lamborghinis, big houses

without any sort of backstop

around how they gained that

money are pretty much gone,”

he says. “When [the Proceeds of

Crime Act] was written, virtual

currency didn’t exist, so what

we’ve got now is a mechanism

[that is] like cash, like gold, [but]

sits outside that legislation.

We’re kind of in the same situation

with crypto that we were with

cash 20 years ago. We haven’t

got the legislation to seize it.”

A Home Office spokesperson

told New Scientist that it was

working closely with police

forces and academia to “crack

down on the abuse of crypto

assets” and to provide new

powers to more quickly and

easily seize cryptocurrency

assets and the right tools and

training for law enforcement. ❚

the technology. “It’s an evolving

problem,” he says.

Although there are significant

hurdles, there is also a large

incentive for police forces

to crack down on illicit

cryptocurrency wallets: they

can sell the currency. Half of the

proceeds go to the Home Office,

and the police force itself keeps

the other. Greater Manchester

Police has recently spent

£1.5 million on staff to bolster

its cryptocurrency recovery unit.

The UK’s National Crime

Agency wouldn’t say how much

cryptocurrency it has seized, and

the organisation, like intelligence

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agencies MI5 and GCHQ , is

exempt from FOI legislation.

But Gary Cathcart, the NCA’s

head of financial investigations,

confirmed that it has been

involved in investigations in

which cryptocurrency was seized.

Cathcart says that crimes such

as drug dealing leave people with

huge amounts of physical cash,

which is hard to launder in the

UK. The cash typically used to be

carried to less regulated markets

on airlines by paid “mules”.

Cryptocurrency is making this

process much easier, faster and

less risky, because funds can

simply be transferred digitally.

“If you’ve got a load of

fraudsters with a load of bitcoin,

and you’ve got a load of drug

dealers with a load of cash, then

it’s a perfect storm,” he says.

Despite its UK-wide role tackling

cybercrime and technical skills,

the National Crime Agency has

the same problems that regional

police forces do when faced with

cryptocurrency. Cathcart hopes

that new legislation will provide

better tools. For example, the

Money Laundering, Terrorist

Financing and Transfer of Funds

Regulations, which cover banks,

also now cover, as of January 2020,

cryptocurrency exchanges:

services that allow people to

trade and store cryptocurrencies

in a similar way to a bank. This

requires exchanges to register

with the UK’s Financial Conduct

Authority, and carry out checks

on their customers and report

anything suspicious.

Cracking cases

A joint report from the Treasury

and the Home Office published

in December 2020 shows that

this process can indeed crack

cases. It details how an unnamed

UK cryptocurrency exchange

passed a report of suspicious

activity to the National Crime

Agency, leading the Police Service

of Northern Ireland – which

didn’t answer New Scientist’s FOI

“ We’ve got a mechanism
that is like cash but
we haven’t got the
legislation to seize it”

8 January 2022 | New Scientist | 19

Bitcoin

Dyfed-Powys

Police

£2,373,000

West Midlands

Police

£14,162

Cheshire

Constabulary

£16,510

Lancashire

Constabulary

£14,475

Hertfordshire

Constabulary

£112,723

Leicestershire

Police

£314,358

Norfolk

Constabulary

£206,482

(^) Metropolitan Police
£294,000,000
Top 10 UK police forces by cryptocurrency seizure
Kent Police
£216,909
Greater
Manchester
Police
£25,000,000
Dash
Ethereum Zcash
Monero
£7361
£658
£812
£4536
Type of cryptocurrency £212