Syedur Rahman and Ulrich Schmidt consider the National Crime Agency’s call for companies to share crypto data with enforcement agencies
The National Crime Agency (NCA) is asking financial services companies to share data with law enforcers in an effort to improve identification of illegal cryptocurrency activity.
The agency estimates that £100 billion is laundered each year in the UK and, whilst criminal networks exploit legal business structures such as cash-intensive businesses, the use of cryptocurrencies to launder money is widely established. To combat this, the NCA has said that both the public and private sectors should be working to increase awareness of the money laundering risks associated with crypto.
The NCA’s call for greater information sharing regarding crypto is part of a number of priorities agreed in conjunction with the Financial Conduct Authority (FCA), Home Office and Treasury to help the financial sector combat what the NCA views as the biggest economic crime threats.
Ecosystem
The NCA says it aims to protect the public by creating a cryptoasset ecosystem that is increasingly resilient to criminal abuse by those involved in activities such as fraud, money laundering, ransomware, terrorist financing and sanctions evasion.
It wants to:
- Increase awareness of the risks associated with illicit crypto activity and the sharing of data to create a fuller intelligence picture for both public and private bodies.
- Increase engagement across regulated sectors to identify proceeds of crime tied to illicit crypto activity.
- Expand the collection and sharing of indicators of suspected illegal crypto investment activity, such as fraudulent initial coin offerings or rug pulls.
- Establish processes for the freezing and restraint of suspect funds held on Virtual Asset Service Provider (VASP) platforms.
- Assist in the creation of new engagement groups and forums (and the enhancing of existing ones) to improve the understanding of cryptocurrency use for terrorist financing purposes.
Focus
The NCA’s enhanced focus on crypto comes just days after the Serious Fraud Office (SFO) announced that it had used its new power to freeze crypto wallets - granted under the Economic Crime and Corporate Transparency Act 2023 - for the first time. The SFO’s announcement came weeks after HM Revenue and Customs said that the UK’s adoption of a new crypto asset reporting framework could increase tax revenue by £315 million over four tax years, beginning in 2026-27.
These developments indicate that agencies within the public sector have recognised the urgent need to tackle criminals’ increasingly sophisticated attempts to hide criminal assets. Criminals have long embraced the use of cryptocurrencies, to both disguise their criminal gains and to make those gains in the first place. It is easy to see why, as cryptocurrencies are a convenient way for criminals to make it more complicated for the authorities to trace the proceeds of crime.
Understanding
But we are now seeing a greater understanding from the regulators regarding how both individual and team efforts can be made to tackle the criminal risks associated with cryptocurrencies. This is, however, far from straightforward.
There are always practical difficulties when attempting to coordinate large-scale efforts involving multiple agencies with thousands of employees. Then there is the private sector to be considered, which may often have different motivations, incentives and goals to the public sector agencies. And although the NCA’s goal of increasing awareness of the risks associated with illicit crypto activity is admirable, it remains to be seen whether the general public will appreciate or understand these risks.
The efforts being made by the NCA are understandable. But only time will tell whether they will reap rewards.
