Cryptoassets and Proceeds of Crime
The Economic Crime and Corporate Transparency Act 2023 has received Royal Assent and, when in force, will implement a large number of changes aimed at fighting economic crime and other illegal activity.
One major reform in the Act is in relation to Cryptoassets and how they can be seized under amendments to the Proceeds of Crime Act 2002.
What are Cryptoassets?
Cryptoassets serve as a pseudo-anonymous, low-cost, and relatively quick method to move funds globally. There are low barriers to entry, users merely need an internet-connected device to transact with cryptoassets.
Given these characteristics, it is little surprise that this technology is increasingly popular and law enforcement are already investigating terrorist financing cases where cryptoassets have been used.
The NCA’s National Strategic Assessment noted a particular acceleration in the criminal use of these assets during the pandemic.
Further, cryptoassets are one of only a few accepted payment mechanisms most used by cyber criminals demanding payment following a ransomware attack. These attacks are increasingly common and are said to pose a significant threat to the UK public and businesses.
The ability to move property quickly, across borders, without the need for standard banking services, and often to hold it anonymously, can make these assets attractive to those engaged in economic crime and terrorist financing.
What measures are being put in place?
The measures in the Act will:
- Improve the criminal confiscation powers in Parts 2, 3 and 4 of POCA in relation to cryptoassets.
These reforms will: enable officers to seize cryptoassets during the course of an investigation without first having arrested someone for an offence; enable officers to seize cryptoasset-related items; and enable the courts to better enforce unpaid confiscation orders against a defendant’s cryptoassets.
- Bring cryptoassets within the scope of civil forfeiture powers in Part 5 of POCA 2002. These powers would be simple and user friendly for law enforcement agencies.
- Ensure that forfeiture powers are accompanied by supplementary investigative powers in Part 8 of POCA, similar to investigatory powers that exist to support the forfeiture of cash, listed assets and funds in certain accounts.
- Mirror the civil forfeiture related powers in Part 5 and Part 8 of POCA into counter-terrorism legislation (Schedule 1 to the Anti-Terrorism, Crime and Security Act 2001 and Schedule 6 to the Terrorism Act 2000) to provide sufficient flexibility to be able to suppress the risk that cryptoassets become increasingly used for terrorist purposes.
These new powers will be used alongside extensive new money laundering provisions. We will be carefully assessing the scope of these new powers and monitoring how police and prosecuting authorities propose to respond.
All of our lawyers have an intimate understanding of confiscation powers and should be consulted as soon as possible if you are being investigated or prosecuted for any crime that might result in an application under the Proceeds of Crime Act 2002.
How can we help?
We ensure we keep up to date with any changes in legislation and case law so that we are always best placed to advise you properly. If you would like to discuss any aspect of your case, please contact us on 0208 309 5010 or email newenquiries@nelson-guest.co.uk.
Image credit: "alt crypto" by TLC-kios is marked with CC0 1.0.