On 6 October 2021, Deputy Attorney General Lisa O. Monaco announced the creation of the United States Department of Justice’s National Cryptocurrency Enforcement Team (NCET). The NCET aims to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure. The NCET will also assist in tracing and recovery of assets lost to fraud and extortion, including cryptocurrency payments to ransomware groups. Recognizing that crypto has become the preferred means of exchange of value on “dark markets” for illegal drugs, weapons, malware, and other hacking tools, NCET also aims to foster the development of expertise in crypto and blockchain technology across all aspects of the NCET’s work. In an interview, Deputy Attorney General Lisa O. Monaco noted that “if cryptocurrency exchanges want to be the banks of the future, we need to make sure people can have confidence in these systems.”
The DOJ’s new crypto task force is the appropriate and proactive response to restrict the criminal use of cryptocurrencies. The crypto industry and regulators should work together to find new and adaptable solutions to ensure regulatory compliance and foster innovation. Active collaboration between government and industry players, coupled with proactive monitoring, is key to the healthy growth of the industry and institutionalization of crypto as the sector mergers with traditional finance. By taking this step, the DOJ will assist the industry in identifying criminals that aim to discredit the crypto ecosystem. The more that ransomware is reported, the better-educated regulators can be in constructing policy that tackles these problems.
Who will be a part of the NCET?
The NCET will combine the experience and special expertise of the DOJ Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), Computer Crime and Intellectual Property Section (CCIS), and experts from other sections of the DOJ’s Criminal Division, as well as experts from the U.S. Attorney’s office. Members of the NCET will combine their knowledge of financial systems, blockchain technology, tracing transactions, and applicable criminal statutes to address illegal activities involving cryptocurrency.
Additionally, they will train and advise federal prosecutors and law enforcement agencies in developing robust investigative and prosecutorial strategies to combat crypto crime. To maximize DOJ’s effectiveness in conducting investigations, prosecutions, and forfeitures involving crypto, the NCET will support coordination and sharing of information between various enforcement offices.
The head of the NCET will be selected based on his/her experience with complex criminal investigations and prosecutions, as well as the technology underpinning cryptocurrencies and the blockchain. The head of the NCET will be reported to the Assistant Attorney General in the Criminal Division. Once selected, the head of NCET will lead the team of attorneys from MLARS, CCIPS, and Assistant U.S. Attorneys Office across the country. The team will then identify, investigate, support, and pursue cases against crypto exchanges, infrastructure providers, and other entities that enable the misuse of cryptocurrency and related products to commit or facilitate criminal activity.
NCET’s Focus Area
As a part of a nationwide enforcement effort to combat the use of crypto as an illicit tool, the NCET will investigate and prosecute crypto cases.
The NCET will not only pursue its own cases but also support existing and future cases brought across the Criminal Division and in the U.S. Attorneys’ Offices across the country. In addition, NCET also aims to develop and maintain relationships with federal, state, local, and international law enforcement agencies that investigate and prosecute cryptocurrency cases. This in turn will bring NCET one step closer to achieving its goal of deterring, disrupting, investigating, and prosecuting crypto crime and recovering illicit proceeds from those crimes.
Further, it will identify areas that call for increased investigative and prosecutorial focus. Professional money launderers, ransomware schemes, and financial institutions working with cryptocurrency will be placed under increased scrutiny.
To better protect consumers from crypto-related financial crime, increase the efficiency of the investigation process, and further the criminal enforcement mission, the NCET collaborates and builds relationships with private sector actors with expertise in cryptocurrency matters.
Why Merkle Science
Putting investor and consumer protection at the forefront, the U.S has put crypto-related crimes under the microscope and its regulatory bodies are looking to strengthen their crypto regulatory regime. On 30 June 2021, the United States Financial Crime Enforcement Network (FinCEN) issued its first AML/CFT priority list wherein the FinCEN noted that cryptocurrencies have become “currency of preference in a wide variety of illicit online activities.” FinCEN added that cryptocurrencies are often used to layer transactions in order to hide the origin of money derived from illicit activities. Criminals often leverage tools such as mixers tumblers to break the connection between the sender address and the receiver address.
Merkle Science’s highly customizable and easy-to-use platform provides near real-time detection of blockchain transactional risks Our predictive cryptocurrency risk and intelligence platform set the standard for the next generation of financial safeguards and criminal detection.
Merkle Science’s proprietary Behavioral Rule Engine allows crypto businesses to tailor the tool according to their risk policies based on the recent changes so that businesses may stay ahead of emerging illicit activities and fulfill their local compliance obligations.