US authorities & Europol focus on combating the abuse of virtual currencies

On 18-19 June 2015 a Virtual Currencies Conference was held at Europol's Headquarters in The Hague, the Netherlands with a view to further strengthening the international cooperation and operational focus against the abuse of virtual currencies, such as Bitcoin, for criminal transactions and money laundering. The event was co-organised by Europol's European Cybercrime Centre (EC3) and U.S. ICE Homeland Security Investigations (HSI) for the second time, following the success of the previous conference on this topic in June 2014.

The conference brought together over 120 professionals from 24 EU Member States and five non-EU countries. The vast majority of the participants were law enforcement practitioners involved in investigations of cybercrime, money laundering and asset recovery. However, representatives from the virtual currencies industry, the financial sector and academia also participated. Close cooperation across sectors is deemed vital for creating a balanced position for virtual currencies in economies around the world. Virtual currencies have several positive features, such as the speed and low cost of international payments but the acceptance of virtual currencies for legitimate transactions also calls for proper safeguards in terms of customer protection and preventive measures against the abuse of anonymity by criminal gangs.

The conference included a crash course on virtual currencies for participants who were less familiar with them. Emphasis was put on how criminals have incorporated virtual currencies into their business models. Virtual currencies are used for payments related to extortion, especially in ransomware cases, for the trade in drugs, weapons and child abuse material on the Darknet as well as for laundering and cashing out the proceeds of such crimes. A series of tools, projects and R&D activities to investigate and trace bitcoins was presented, as well as standards and guidelines for the detection, seizure and forfeiture of virtual currencies. The policy dimension was also addressed with attention to the current legal possibilities and challenges, and calling for the alignment of legal frameworks. This should avoid the emergence of safe havens for criminal finance; not only in exotic and offshore environments but also within the European Union. The conference also served as a platform for the launch and introduction of a Tripartite Working Group between Europol, the Basel Institute and Interpol on the sharing of expertise concerning money laundering with virtual currencies.

Quite exceptional was the extraordinary line-up of speakers that had been directly involved in the most remarkable takedowns and investigations against criminal online markets and the provision of underground payment schemes. They shared their experiences from the takedown of Liberty Reserve, Silk road 1&2 and several other ground-breaking interventions from the perspective of investigation and prosecution.

Europol highly appreciated the high level of attendance and in particular the willingness of several U.S. agencies and services (FBI, ICE, IRS, FinCEN and DoJ SDNY) to share their knowledge and expertise. Several follow-up actions will be launched to further enhance capacity building and operational cooperation and to provide input for policy development.