Ministry of Justice seeks faster crypto investigations
Not only does the US Department of Justice want cryptocriminals who violate money transmitter licensing laws to spend more time in prison, but it also wants to make it easier to put them there.
When its crypto regulatory advisory report came out last week, the big news was the creation of the Digital Asset Coordinator (DAC) Network, a group of 150 prosecutors specially trained in cryptocurrencies and the operation of virtual asset service providers (VASPs) such as exchanges and money services businesses (MSBs) running on and off the ramp dollars and other fiat currencies.
See also: Ministry of Justice signals intention to crack down on cryptocrime
But the report, “The Role of Law Enforcement in Detecting, Investigating and Prosecuting Criminal Activity Related to Digital Assets,” made a number of specific recommendations for legal changes to make their jobs easier and more successful. Several appeared to be aimed well beyond the crypto industry, notably a proposal to double the maximum prison sentence for unlicensed money transferring violations from five to 10 years and change legal guidelines to better ensure longer sentences. These were essentially framed as “this would also affect crypto.”
Read more: DOJ seeks to double prison time for money transfer crimes
Anti-tipoff extension
But the Justice Department had two more high-priority legislative requests, beginning with a request to extend legal anti-tip provisions that prevent officers or agents of financial institutions from informing customers that they are the subject of an investigation to VASPs.
Those statutes, the DOJ said, “do not currently reach certain VASPs that operate as MSBs.”
The reason, it said, is that while they are defined as “financial institutions” under the broader Bank Secrecy Act, VASPs are not so defined in the law, which prohibits them from telling customers about a subpoena.
At that point, however, the DOJ reverted to its apparent goal of expanding the broader anti-tipping laws by noting that the subpoenas covered “serious offenses of omission” such as racketeering, some drug and people-trafficking offenses, tax and securities crimes. breaches, as well as certain computer crimes, mail fraud and systems for electronic fraud.
This is necessary, it said, “in light of the increasing use of digital assets across a wide range of criminal activities.”
A longer limitation period
The third and final high-priority request for congressional action is to extend the statute of limitations for all crimes involving the transfer of digital assets from the standard federal five years to 10 years.
The reason is that investigations related to digital assets “present significant challenges” that can make them “complex and lengthy, in part because their cross-border nature means that they require requests for mutual legal assistance from (often several different) foreign authorities, which can take years to solve.”
It also requests that the three-year suspension of the statute be extended when foreign evidence must be obtained in cases related to digital assets.
Down the road
Although not among the highest priorities, venue selection and record retention can be a significant difficulty for digital asset cases against cryptocurrency and hosting companies that “claim to be located everywhere and nowhere (personnel in one place, registration in another place, records in a third place) place).” So the Justice Department wants to be able to prosecute alleged offenders in any district where a victim is located.
And it wants more funding to do all this.
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