A new DOJ report calls for increased international collaboration to combat the illicit use of digital assets. Their ideas include assisting foreign nations in developing the infrastructure required to investigate cybercrime, as well as effective information exchange and standard worldwide rules.
More collaboration is required.
The United States Department of Justice (DOJ) delivered their response to President Joe Biden’s Executive Order on digital assets from March 2022 yesterday.
The 58-page report, titled “How to Strengthen International Law Enforcement Cooperation for Detecting, Investigating, and Prosecuting Criminal Activity Associated With Digital Assets,” was created in collaboration with the State Department, Treasury Department, Department of Homeland Security (DHS), Securities and Exchange Commission (SEC), and Commodity Futures Trading Commission (CFTC).
While the report acknowledges that “the United States supports the responsible use and development of digital assets,” it also states that cryptocurrencies’ “perceived anonymity” makes them an appealing vehicle for money laundering schemes, ransomware, terrorist financing, fraud, and sanctions evasion. The Department of Justice also warns that criminals have targeted customers and retail participants all around the world by exploiting information asymmetries and anonymity-granting technology.
“Uneven and often inadequate regulation,” the report says, “allow criminals to expose the U.S. and international financial systems to risk from jurisdictions where regulatory standards and enforcement are less robust.” According to the research, one of the major issues that law enforcement organizations face is criminal actors engaging in “jurisdictional arbitrage.”
The DOJ has called for international collaboration to prevent the illegal usage of cryptocurrencies. Recommendations for improving cross-border cooperation include helping other nations build the necessary infrastructure to “conduct the type of complex and highly specialized investigations required in this area,” engaging in “robust” information sharing, and implementing international regulation standards to reduce the possibility of jurisdictional arbitrage.
The report came on the same day that a Reuters investigation alleged that top cryptocurrency exchange Binance had been used to launder more than $2.35 billion by North Korean hackers, Russian drug dealers, and West-European organized crime groups since early 2018.