Cryptocurrencies are not illegal, says Sgt. Adrienne Vickery, but they will be subject to scrutiny and investigation if used for illicit purposes, such as laundering funds or facilitating criminal activity.
REGINA — As criminals increasingly turn to cryptocurrency to perpetrate fraud and obfuscate the origins of their funds, law enforcement agencies are adapting by acquiring new skills to manage this evolving financial landscape.
In a recent interview, Travis Poland engaged with Sgt. Adrienne Vickery, the RCMP’s national cryptocurrency coordinator within the Federal Policing Criminal Operations Branch, to gain insight into her efforts to investigate cryptocurrency-related money laundering activities.
What is cryptocurrency?
Cryptocurrency represents a type of digital asset that retains its value and can be exchanged for goods and services by individuals or businesses willing to accept it. Among the myriad cryptocurrencies, Bitcoin stands out as the dominant player, frequently appearing in various criminal investigations due to its wide recognition and utilization. While cryptocurrencies themselves are not illegal, their application in laundering funds or enabling criminal enterprises warrants a thorough investigation.
Is it anonymous?
Cryptocurrency transactions are classified as pseudo-anonymous. Each Bitcoin transaction is recorded on the blockchain, a public ledger of all transactions akin to the detailed records maintained in an accountant’s office. This electronic record includes critical details such as the amount transferred and the involved addresses. However, the true identity of the cryptocurrency owner remains undisclosed. Criminals often resorts to aftermarket money laundering services to enhance their anonymity by mixing cryptocurrency funds and obscuring their origins. Although it can be difficult to pinpoint the identity behind cryptocurrency wallets, criminals eventually seek to convert their digital currency to cash, and that’s when law enforcement agencies can intervene.
How do criminals use cryptocurrency?
The pseudo-anonymity of cryptocurrency transactions, coupled with their accessibility, makes them enticing for criminal exploitation. On the dark web, illicit goods, including firearms and drugs, are being traded for cryptocurrency. This digital currency is also increasingly employed in extortion schemes and fraudulent activities, exemplified by the CRA scam, where victims are coerced into sending funds in Bitcoin. Historically, cash was the preferred medium for criminals engaging in transactions. However, the advent of cryptocurrency provides a new, rapid, and cost-effective means to transfer value and facilitate unlawful activities. In today’s interconnected global economy, it is remarkably simple to maneuver cryptocurrency across the globe within minutes, reaching even remote regions that lack traditional banking access.
What can police do about it?
Advanced software tools are available that enable law enforcement to trace and analyze the movements of funds on the blockchain. Once criminals attempt to convert cryptocurrency into traditional financial instruments, police can employ the range of investigative techniques that they’ve utilized for years. Recent Canadian regulations regarding cryptocurrency empower law enforcement to gather intelligence on suspicious transactions through the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Investigations involving cryptocurrencies can be technically complex and often necessitate collaboration among various units, including digital forensic teams, cybercrime units, financial crime experts, and online undercover operations. By joining forces with partner law enforcement agencies, they enhance their operational capabilities and effectiveness.
Has cryptocurrency been involved in any notable cases?
The most significant case reported thus far revolves around the Canadian exchange Quadriga. Its CEO, Gerald Cotton, passed away from Crohn’s disease complications while traveling in India. Cotton was reportedly the sole individual possessing the access credentials needed to retrieve approximately $250 million in clients’ cryptocurrency assets stored within the exchange. This matter remains under investigation.
What should police know about it?
Promoting education in this area is crucial, and efforts are underway to enhance awareness and provide necessary training to officers. It is imperative for police to grasp the fundamentals of cryptocurrency, be able to recognize its presence, and know when to reach out to experts for assistance during investigations.
My best piece of advice is to embrace this technology rather than fear it. Initially, when I began my research into cryptocurrency, I felt somewhat overwhelmed due to my lack of a technical background. However, I quickly learned that cryptocurrency represents another avenue for transferring and storing value. Nowadays, we routinely observe funds moving digitally through various channels like e-transfers, credit cards, and wire transfers. Cryptocurrency functions similarly but features its own unique elements, and methodologies exist that enable us to effectively investigate cases involving it.
**Interview with Sgt. Adrienne Vickery on Cryptocurrency and Criminal Activity**
**Travis Poland:** Thank you for joining us today, Sgt. Vickery. To start, can you explain what cryptocurrencies are and how they’re being utilized in illegal activities?
**Sgt. Adrienne Vickery:** Thank you for having me, Travis. Cryptocurrencies are digital assets that can be exchanged for goods and services. The most recognized is Bitcoin. While cryptocurrencies themselves are not illegal, they are being exploited by criminals for activities such as money laundering and fraud, particularly because of their pseudo-anonymous nature.
**Travis Poland:** You mentioned that cryptocurrency transactions are pseudo-anonymous. Can you elaborate on what that means and how it affects investigations?
**Sgt. Adrienne Vickery:** Absolutely. When a cryptocurrency transaction is made, it’s recorded on the blockchain – a public ledger that includes details like the transaction amount and wallet addresses. However, the actual identities behind those wallets remain hidden. This anonymity can facilitate criminal behavior, as criminals often use laundering services to obscure the origins of their funds. But they eventually need to convert cryptocurrency back into cash, which gives law enforcement a window to intercept them.
**Travis Poland:** How are criminals leveraging cryptocurrencies for illicit activities today?
**Sgt. Adrienne Vickery:** Criminals are using cryptocurrencies for various illicit transactions, including trading illegal goods on the dark web, participating in extortion schemes, or engaging in scams like the CRA scam, where victims are coerced into sending Bitcoin. The speed and ease of transferring value globally make cryptocurrencies appealing compared to traditional cash transactions.
**Travis Poland:** Given the rise of cryptocurrency-related crimes, what steps is law enforcement taking to tackle this issue?
**Sgt. Adrienne Vickery:** We are continually upgrading our skills and resources. Advanced software tools allow us to trace and analyze blockchain transactions. Once we can identify attempts to convert cryptocurrency into traditional currency, we can apply traditional investigative techniques. Recent regulations also empower us to work with agencies like FINTRAC to monitor suspicious transactions more effectively.
**Travis Poland:** With these advancements, do you think law enforcement will be able to keep up with the evolving landscape of cryptocurrency crime?
**Sgt. Adrienne Vickery:** Yes, we are committed to staying ahead of these developments. Ongoing training and collaboration with other agencies are crucial. While the criminal use of cryptocurrency poses challenges, our strategies and tools are evolving to enhance our investigative capabilities.
**Travis Poland:** Thank you, Sgt. Vickery, for your insights into this important topic. It’s clear that while cryptocurrencies are not illegal, vigilance is essential to prevent their misuse in criminal activities.
**Sgt. Adrienne Vickery:** Thank you, Travis. It’s crucial for the public to understand how cryptocurrencies work and the importance of scrutinizing their use in our society.
