The European Union’s top police agency Europol, together with Eurojust, an agency focusing on cross-border judicial issues, has released a paper that identifies and categorizes the common challenges in combating cybercrime.
The list inter alia includes virtual currencies saying that “the widening criminal use of decentralised virtual currencies and the increased use of tumbler/mixer services, effectively prevent law enforcement to ‘follow the money’ and significantly complicate the possibilities for asset recovery and the prevention of fraudulent transactions”.
The increasing criminal use of encryption, anonymisation tools, virtual currencies and the Darknets make it difficult for law enforcement to establish the physical location of the perpetrator, the criminal infrastructure or electronic evidence. The problem is further accentuated due to lack of standards for due diligence and KYC, as well as non-application of existing regulations.
The paper noted that a growing number of cybercrime investigations last year involved cryptocurrencies and blockchain analytics in order to progress the criminal business model. This underscored the need to ensure that law enforcement and judicial authorities have the expertise, tools and legislative and regulatory means at their disposal to ‘follow the money’.
“Case law (jurisprudence) can be a valuable tool to compensate for a lack of specific legislation, but unfortunately little case law exists with regard to new developments (e.g. virtual currencies, anonymisation tools and various technology-driven criminal modi operandi)”, it added.
