National Crime Agency Targets Cryptocurrency Mixers
The National Crime Agency (NCA) in the UK has begun targeting cryptocurrency mixers, citing national security and money laundering concerns. Speaking in the Financial Times, the head of financial investigation at the National Crime Agency, Gary Cathcart said:
“They can be used to provide a ‘layering’ service, cleaning criminal cash, obscuring its origins and audit trail, similar to how a cash business might be used by criminals to legitimise cash through the banking system”
The proposed legislation would mean that decentralise mixers such as Tornado Cash would be compelled to perform Anti Money Laundering (AML) checks, as well as Know Your Customer (KYC) verification on all users of their systems, flagging any suspicions to the relevant authorities.
Cathcart, defending the proposed action, went on to say:
“when it comes to crypto transactions the owners’ identity is already obscured, and the reality is that prying eyes would need additional, hard to get information, to determine a wallet’s balance and it’s owner”
The National Crime Agency claim that the motive behind the requested crackdown is that stricter rules would give peace of mind to consumers and let law enforcement get judge approved court orders for investigation; allowing law enforcement to investigate whether a user is interacting with the service for privacy reasons or to hide malicious acts.
One thing is certain, the more cryptocurrency adoption increases, and the higher the flow of wealth and transactional volume from traditional finance into crypto, the brighter the regulatory spotlight will shine. Criminals will always find a way to circumnavigate the legislation to launder, hide and divert their assets and the NCA believe that the next step in the fight back should focus on cryptocurrency. The truth is that criminals using cryptocurrency as a money laundering tool are still in the minority, with Chainalysis’ 2022 Crypto Crime Reportciting the figure of $33 billion in laundered cryptocurrency in the period from 2017, in comparison to an estimated $800 billion - $2 trillion laundered in FIAT currency.
In a time of increased scrutiny of cryptocurrency and crypto assets, law enforcement and governments around the globe are increasingly citing the need for heavy regulation and monitoring of private transactions, to ensure the compliance with political sanctions and to prevent terrorist funding. Cynics would suggest that the current offensive is in fact a cleverly timed attack on the sector that threatens the long-standing closed shop of world finance.
