The US Department of Justice is shedding new light on its efforts to combat cybercrime and illegal activities involving cryptocurrencies and digital assets.
A newly issued DOJ report to President Biden outlined a number of areas the government is trying to crack down on cybercrime and fraud, including malware groups and cryptocurrency trading.
“The increasing use of digital assets in the global financial system calls for strong steps to reduce the risk of digital assets being 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 said.
The DOJ report came as part of a strengthened cybercrime enforcement strategy that the White House launched in March with an executive order focused on digital assets and cryptocurrency crimes.
Among the items in the report was a new set of statistics from the FBI detailing how heavily cryptocurrency and cybercrime have become part of the agency’s day-to-day law enforcement efforts.
“As of July 2022, the FBI had identified an association with digital assets, ranging from violent crime and gangs to weapons of mass destruction to public corruption and terrorism, in more than 1,100 separate investigations across more than 100 different categories of investigative programs,” the report said.
“Since fiscal 2014, the FBI has seized approximately $427 million in virtual assets (value at time of seizure),” it continued. “The FBI also conducted joint investigations to assist partner agencies that led to the seizure of billions of dollars in virtual assets.”
In the meantime, the handling of these assets will be taken over by the US Marshals Service. According to the report, the agency plans to engage the private sector in its efforts to handle the management and expiration of the digital assets that law enforcement agencies seize from cybercriminals.
“These team members have diverse backgrounds in finance, wealth management, policy development, and forfeiture,” the DOJ report said. “Additionally, the Marshals Service plans to award a new competitive national contract for virtual currency-related custody and disposal services in fiscal year 2023, which will allow the Marshals Service to leverage industry expertise to efficiently and securely handle evolving types of virtual currency.” to manage while avoiding significant losses expenditure on technology and personnel.”
The report also details several challenges the government faces in fighting cryptocurrency-related crimes. One particular area of concern is the continued proliferation of mixer services, which allow transactions to be hidden from tracing. Despite efforts to shut down major mixers, the services remain more popular than ever, with many operating outside of US government jurisdiction and regulatory requirements.
“Under US law (including the Bank Secrecy Act (BSA) and its implementing regulations), many exchanges and other participants in the digital asset market qualify as money transmitters that are required to comply with the AML/CFT [anti-money laundering and countering the financing of terrorism] Obligations applicable to money services businesses,” the DOJ explained to other digital assets without undergoing rigorous AML/CFT review.”
The department is also calling on lawmakers to step in and provide more tools to fight cybercrime. In particular, the DOJ is calling for a longer statute of limitations for cybercrimes.
“These investigations can be complex and lengthy, in part because their cross-border nature means they require mutual legal assistance requests from (often several different) foreign governments, which can take years to resolve,” the report said. “As a result, it is sometimes impractical to identify the perpetrator and bring charges within the usual five-year statute of limitations.”