UK National Crime Agency to Launch Specialised Crypto Team

30 Jan

Introduction

The National Crime Agency (NCA) is a law enforcement organisation that oversees efforts to reduce serious and organised crime in the UK. They investigate a variety of criminal conduct, including money laundering, drug trafficking, and fraud. In order to accomplish this, they focus their operational efforts on the criminals who pose the biggest threats to the communities and the UK as a whole. They support the police, Regional Organised Crime Units, and other law enforcement authorities in addition to running their own investigations. Despite all of the efforts made to reduce crime, it has come to NCA’s attention that further developments are needed regarding cryptocurrency crime. Various countries have reported an increase in the frequency of and losses from cryptocurrency scams, which has led to a rise in the worry about cryptocurrency fraud on a global scale.

Understanding the current crypto climate

Despite the decline in the value of cryptocurrency such as Bitcoin, cryptocurrency crime reached historic highs in 2022. Between October 2021 and September 2022, cryptocurrency fraud in the UK increased by 32% to £226 million. The findings are part of a larger fraud crisis, which UK Finance claimed got worse as individuals switched their financial activities online during the pandemic. Fraud as a whole increased 8% annually to £1.3 billion in 2021; indicating a clear correlation between when circumstances are hard and when fraudsters take advantage of less knowledgeable investors by guaranteeing great returns. Consequentially, crucial services, companies and individuals are all impacted. For example, Russian-speaking cyber organisations constitute a significant threat to UK interests, but domestic cybercriminals are also a matter of serious concern due to advancement in technology and in the increased sophistication of the crimes.

What are the NCA doing to tackle this?

To address the substantial rise in cryptocurrency crime and the serious effects it has had, the NCA has established a new team under its National Cyber Crime Unit called NCCU Crypto Cell; implying that there will be more attention on regulating crypto assets given the formation of this new team. The NCA intends to take the initiative in locating potential targets for additional investigation and will also provide assistance if understanding of cryptocurrencies is required for ongoing or forthcoming investigations.

As part of the initiative, the NCA has been looking to hire a specialist cryptocurrency investigator with extensive experience doing blockchain investigations on serious and organised crime; advanced blockchain tracing skills and experience finding and retrieving seed words are prerequisites. The investigator will be expected to help both ongoing and new investigations by offering investigators strategic and tactical guidance when handling situations involving cryptocurrency. Alongside this, the investigators from the new NCCU Crypto Cell Unit will be dedicated to a current cryptocurrency mandate and have the tools and understanding to deal with targets in the UK. In response to the government's desire to eradicate "dirty money" in the nation, NCA's action aims to raise regulatory focus on crypto assets in the UK.

The UK is committed to stopping the use of cryptocurrency from being used to finance illegal activities. In order to accomplish this, Parliament introduced the Economic Crime and Corporate Transparency Bill in September 2022, which facilitated police forces' ability to look into and act against organised crime groups that use cryptocurrency. It is intended that this will make it simpler and faster for law enforcement organisations like the NCA to seize, freeze, and recover cryptocurrency assets.

What can be expected in 2023?

The Payment Services Regulator's recent Consultation Paper (CP22/4) outlines a suggested plan to fight payment scams. The paper proposes that payment processors be subject to harsher rules requiring them to compensate consumer fraud victims. In all but exceptional cases, compensation should be required for consumer and charitable victims of authorised push payment fraud. It would also mandate payment for all cases over a minimum threshold of £100 and would give the payment service provider a 48-hour timeframe to compensate the victim, barring the need for additional investigation.

In the upcoming years, it's possible that comparable laws and regulations, which force companies to bear the cost of compensating customers who are the victims of fraud, may spread to other industries like telecommunications and online service providers – according to the Payment Services Regulator.

Additionally anticipated is the adoption of new fraud legislation aiming to tackle "failure to prevent". Since the government is being urged to take action to protect consumers from fraud, particularly in light of the growth of online scams, we may anticipate that 2023 will bring additional developments in regard to the adoption of such an offence.

For bespoke legal advice, contact Arianne King.