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The U.S. Department of Justice is shedding new light on its efforts to combat cybercrime and illicit activity around cryptocurrencies and digital assets.
A newly issued report to President Biden from the DOJ outlined a number of areas in which the government is looking to crack down on cybercrime and fraud, including among malware groups and cryptocurrency trading.
“The growing use of digital assets in the global financial system demands strong steps to reduce the risk that digital assets are used for illicit finance or other criminal purposes — such as money laundering, cybercrime, ransomware, narcotics, theft and fraud, and human trafficking — or to undermine our national security by enabling terrorism and proliferation financing,” the report read.
The DOJ report came as part of a heightened cybercrime enforcement strategy the White House rolled out in March with an executive order focused on digital assets and cryptocurrency crime.
Among the items in the report was a new set of statistics from the FBI detailing just how deeply cryptocurrency and cybercrime have become part of the agency’s day-to-day law enforcement efforts.
“As of July 2022, the FBI identified a digital assets nexus in more than 1,100 separate investigations across more than 100 distinct investigative program categories, from violent crimes and gangs to weapons of mass destruction to public corruption and terrorism,” the report noted.
“Since FY2014, the FBI has seized approximately $427 million in virtual assets (valued at the time of seizure),” it continued. “The FBI has also worked joint investigations supporting partner agencies that resulted in the seizure of billions of dollars in virtual assets.”
Handling those assets, meanwhile, will be the U.S. Marshals Service. According to the report, the agency plans to tap the private sector in its efforts to handle the management and forfeiture of the digital assets that law enforcement agencies seize from cybercriminals.
“Those team members have diverse backgrounds in finance, asset management, policy development, and forfeiture,” the DOJ report said. “In addition, the Marshals Service plans to award a new competitive national contract for custodial and disposal services related to virtual currency in FY2023, which will enable the Marshals Service to use industry expertise to manage evolving types of virtual currency efficiently and securely while avoiding significant expenditure on technology and staff.”
The report also includes several challenges facing the government in tackling cryptocurrency-related crimes. One particular area of concern is the continued proliferation of mixer services that allow transactions to be hidden from tracing. Despite efforts to take down major mixers, the services remain more popular than ever as many operate outside of U.S. government jurisdiction and regulatory requirements.
“Under U.S. law (including the Bank Secrecy Act (BSA) and its implementing regulations), many exchanges and other participants in the digital assets marketplace qualify as money transmitters required to comply with the AML/CFT [anti-money laundering and countering the financing of terrorism] obligations that apply to money services businesses,” the DOJ explained. “Yet criminals continue to take advantage of noncompliant actors — including noncompliant cryptocurrency exchanges, peer-to-peer exchangers, or automated cryptocurrency kiosks — to exchange their cryptocurrency for cash or other digital assets without facing rigorous AML/CFT scrutiny.”
The department is also asking legislators to step in and provide more tools for cracking down on cybercrime. In particular, the DOJ wants a longer statute of limitations on cybercrime.
“These investigations can be complex and lengthy in duration, in part because their cross-border nature means that they require requests for mutual legal assistance from (often several different) foreign governments, which can take years to resolve,” the report stated. “As a result, it is sometimes impracticable to identify the offender and bring charges within the standard five-year limitations period.”
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