On October 6, the Department of Justice (“DOJ”) announced the creation of a National Cryptocurrency Enforcement Team (“NCET”). The DOJ press release is set forth in part below, without further commentary, other than to observe that the NCET’s stated goals are to address issues on which we repeatedly have blogged: crypto exchangers and their AML obligations; the process of tracing digital asset transactions; ransomware; so-called “professional” money launderers; and the use of crypto to launder serious crimes such as drug trafficking and human trafficking. This government attempt at a coordinated approach is consistent with the announcement earlier this year by FinCEN of appointing its first-ever Chief Digital Currency Advisor. The DOJ press release states in part:
[In order 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 actors. Under the supervision of Assistant Attorney General Kenneth A. Polite Jr., the NCET will combine the expertise of the Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), Computer Crime and Intellectual Property Section (CCIPS) and other sections in the division, with experts detailed from U.S. Attorneys’ Offices. The team will also assist in tracing and recovery of assets lost to fraud and extortion, including cryptocurrency payments to ransomware groups.
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Importantly, the NCET will draw and build upon the established expertise across the Criminal Division to deter, disrupt, investigate, and prosecute criminal misuse of cryptocurrency, as well as to recover the illicit proceeds of those crimes whenever possible. Because cryptocurrency is used in a wide variety of criminal activity, from being the primary demand mechanism for ransomware payments, to money laundering and the operation of illegal or unregistered money services businesses, to being the preferred means of exchange of value on “dark markets” for illegal drugs, weapons, malware and other hacking tools, the NCET will foster the development of expertise in cryptocurrency and blockchain technologies across all aspects of the Department’s work. The NCET will also play a critical support role for international, federal, state, local, tribal, and territorial law enforcement authorities grappling with these new technologies and new forms of criminal tradecraft.
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NCET team members will be drawn from three initial sources: MLARS, CCIPS, and detailees to the Criminal Division from U.S. Attorneys’ Offices across the country. Team members will draw upon the expertise of their home offices while working collaboratively under the Team Leader to combine their expertise in financial systems, blockchain technology, tracing transactions, and applicable criminal statutes to address illegal activity involving cryptocurrency in a structured way. The NCET will:
- Investigate and prosecute cryptocurrency cases, comprising a central part of a nationwide enforcement effort to combat the use of cryptocurrency as an illicit tool.
- Develop strategic priorities for investigations and prosecutions involving cryptocurrency, in consultation with the USAOs, Department components, and investigative agencies involved in cryptocurrency investigations.
- Identify areas for increased investigative and prosecutorial focus, including professional money launderers, ransomware schemes, human traffickers, narcotics traffickers, and financial institutions working with cryptocurrency.
- Build and enhance relationships with cryptocurrency focused AUSAs and prosecutors with other Department litigating components and offices to pursue cryptocurrency investigations and prosecutions.
- Develop and maintain relationships with federal, state, local, and international law enforcement agencies that investigate and prosecute cryptocurrency cases.
- Train and advise federal prosecutors and law enforcement agencies in developing investigative and prosecutorial strategies. Such training and advice will include providing guidance concerning search and seizure warrants, restraining orders, criminal and civil forfeiture allegations, indictments, and other pleadings.
- Support the coordination and sharing of information and evidence among law enforcement offices to maximize the effectiveness of the Department’s investigations, prosecutions, and forfeitures involving cryptocurrency.
- Collaborate and build relationships with private sector actors with expertise in cryptocurrency matters to further the criminal enforcement mission.