In Order To Restrict Illicit Use Of Privacy Coins, US Secret Service Ask Congress For Help
The illicit use of cryptocurrencies is a major concern of the US Secret Service. Congress was urged by a high ranking official of the agency to look into additional legislation to solve anonymity-enhanced cryptocurrencies and services that are meant to be ambiguous transactions on blockchains, the likes of tumblers or mixers.
US legislation undermined
On June 20, a testimony before the house of representatives Financial Services Subcommittee on Terrorism and illicit Finance by Deputy Assistant Director of the US Secret Service’s Office of Investigations, Robert Novy.
Novy made clear that his office is mainly responsible with the use of virtual currencies “in criminal schemes that undermine the integrity of financial and payment systems, their use in cases of fraud, and their general use as a means of money laundering,” as reported by news.bitcoin.com, citing:
While some digital currencies have operated lawfully, others have been used extensively for illicit activity…The growing illicit use of digital currencies risks undermining the effectiveness of existing U.S. laws and regulations, especially those intended to limit the ability of criminals to profit from their illicit activities.
Congress asked for help
Novy questioned, in his testimony “Congress for help in preventing cryptocurrencies like monero and zcash, which provide users with enhanced privacy and anonymity features, from being used for illicit purposes,” as quoted by Forbes and reported by news.bitcoin.com.
Novy also claimed that “digital currencies are particularly well-suited for supporting crimes that are transnational in nature,” making reference to “the global nature of the internet and modern communication,” as reported by news.bitcoin.com. He further told Congress that:
“We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.”
An official investigations division of the Immigration and Customs Enforcement, Greg Nevano, agreed with Novy, according to Forbes, as reported by news.bitcoin.com. He was also quoted saying that “These new anonymity-enhanced cryptocurrencies are clearly ripe for illicit use in an effort to subvert legitimate law enforcement inquiries,” as reported by news.bitcoin.com. He also claims that it is not impossible, although it is less easy to track the circulations of illicit proceeds utilizing these newer anonymity-enhanced cryptocurrencies, as reported by news.bitcoin.com.
Novy also made recommendations that the law enforcement should adjust to his agency’s “investigative tools and techniques to dismantle criminal groups that use these instruments for fraudulent activity or money laundering,” according to news.bitcoin.com
Criminals prefer what
He also stressed that lawbreakers have increased the usage of virtual currencies to facilitate illicit activities on the internet, in recent years, as reported by news.bitcoin.com. He also detailed that “some digital currencies are primarily used to purchase illicit goods and services,” while others “are primarily used for money laundering—particularly transnational transfers,” as reported by news.bitcoin.com.
Novy explained the characteristics of digital currencies preferred by criminals based on the agency’s investigations, in his testimony.
First of all, they have widespread adoption as a medium of exchange for intended criminal activities,” in addition to “the greatest degree of anonymity.” Their ability for “protection against theft, fraud, and lawful seizure” is also important, as is the ability to “be readily exchanged to and from their preferred currency.” The last characteristic mentioned is “the ability to quickly and confidently transfer value transnationally,” as reported by news.bitcoin.com.