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Financial Crimes

HSI holds discussions with European cybercrime experts on the criminal exploitation of virtual currencies

THE HAGUE, Netherlands — More than 70 law enforcement officials from 21 countries gathered at Europol's headquarters in The Hague June 16 and 17 to coordinate investigations into the criminal exploitation of virtual currencies like Bitcoin. The meeting was co-organized by the European Cybercrime Centre (EC3) hosted at Europol and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

The group of financial and cybercrime investigators, as well as prosecutors, discussed ongoing worldwide criminal cases, involving the criminal use of virtual currencies to purchase, among other items, narcotics and contraband online. Participants at this first-ever international meeting of law enforcement on the criminal exploitation of virtual currencies voiced concerns over the anonymity of financial transactions through some virtual currencies, such as Bitcoin, and the challenges this poses to "following the money" during criminal investigations.

The meeting also addressed the development of Bitcoin ATMs and the growing number of merchants accepting virtual currencies – now estimated at 26,000 – that could continue to expose virtual currencies to abuse by criminal networks. Ongoing criminal cases involving virtual currencies include Liberty Reserve, which is alleged to have conducted 55 million illicit transactions and laundered up to $6 billion in criminal proceeds. The meeting also touched on pending charges against the administrator of the online marketplace Silk Road, who was arrested by U.S. law enforcement after allegedly accepting up to 9.5 million bitcoins for the sale of hundreds of kilograms of illegal narcotics and other contraband. Investigators also revealed the use of bitcoins in the alleged online sale of a toxic substance purportedly for use in a homicide.

Mark Witzal, HSI deputy assistant director for the Financial, Narcotics and Special Operations Division, opened the two-day meeting by speaking about the globalization of virtual currencies and the corresponding need for international collaboration and coordination.

"Law enforcement is seeing a disturbing trend of the use of virtual currencies to buy and sell contraband, then launder the proceeds from those crimes. Coordination meetings such as this are vitally important, so that as each of our law enforcement agencies learns more about how criminals use virtual currencies, and we communicate these lessons with each other," he said.

Olivier Burgersdijk, head of strategy at EC3, emphasized how shifting the focus of law enforcement towards the dynamics of virtual payment schemes is essential to fight organized crime effectively in the future.

"The financial trail is traditionally one of the best ways to find the criminals, in particular to reach the top targets," he said.

The participants pledged cooperation and continued information sharing on the developments of the criminal use of virtual currencies.