Our last post focused on INTERPOL’s newest notice, the Silver Notice. This new tool allows member countries to request information on assets linked to a person’s criminal activities such as fraud, corruption, drug trafficking, environmental crime, and other serious offenses. Included in this is cryptocurrency, which is increasingly associated with criminal activity despite its many legitimate uses. 

While all member countries will have access to the Silver Notice as a means of targeting crypto-related crime, not all member countries are taking the same approach to stop the growing illicit activities related to crypto. A sampling of enforcement styles:

  • Canada: While crypto is not treated as a form of legal tender in Canada, the country allows its use. Canada has been more proactive than others about crypto regulation. Given the concerns and uncertainties with cryptocurrency, the federal government has clearly stated that federally regulated entities, like banks, must comply with all applicable legal requirements and any guidance from federal regulators when working with crypto assets. In 2024, the RCMP began training more officers to investigate crypto crimes.
  • Countries in the European Union: In 2020, the EU’s Fifth and Sixth Anti-Money Laundering Directives came into effect, tightening KYC/CFT (Know your customer/counter financing of terrorism) obligations and standard reporting requirements. The goal of KYC vis-à-vis crypto activity is to prevent money laundering, terrorist financing, and other financial crimes, while CDD (Customer Due Diligence) is a set of measures banks and other financial institutions must take to identify their customers, assess their risks and monitor their transactions. Additionally, while crypto is not official legal tender, the EU requires certain crypto service providers to seek an operating license. Markets in Crypto-Assets Regulation (MiCA), a framework that increases consumer protections, establishes explicit crypto industry conduct, and introduces new licensing requirements, was placed into effect in 2023. This legislation is intended to give regulators the tools they need to track crypto being used for money laundering and terrorism funding while providing users with protections. The EU also passed new crypto regulations in 2023; including plans to create an EU-wide authority to fight money laundering.
  • The People’s Republic of China: Crypto trading is generally banned in China and crypto is not recognized as legal tender. However, local governments are reportedly using private companies to sell digital coins that have been seized in exchange for cash in the midst of a slow economy.

In stark contrast to each of the above examples, and despite the alarming rate of criminal activity involving crypto, as reported by Reuters, is the U.S. approach:

  • The United States Justice Department is disbanding its National Cryptocurrency Enforcement Team and ordering prosecutors to narrow crypto investigations to focus on drug cartels and terrorist groups. The unit known as NCET launched in February 2022 as part of the Biden administration’s bid to combat fraud and illicit finance. But under President Donald Trump, whose family is building its own crypto enterprise, reportedly owning 75% of net revenues from token sales by World Liberty Financial, the U.S. government is now reversing course on crypto. The president has promised to make the United States the “crypto capital of the planet.” The Trump administration is reversing the U.S.’s earlier position even as INTERPOL increases efforts to prevent illegal activities, particularly in the sector of cryptocurrency. The newly stated focus on prosecuting primarily those crypto cases related to drug trafficking and terrorism necessarily excludes white collar crime such as fraud, money laundering, misappropriation of assets, embezzlement, and tax evasion, which may or may not be convenient for the U.S. president and his family.

INTERPOL’s introduction of Silver Notices is a significant step forward in international efforts to trace illicit assets- particularly as cryptocurrencies become an increasingly common vehicle for financial crime. Whether those assets are aggressively pursued will depend on how robust the law enforcement initiatives are in each member county.

It appears that the U.S. has decided not to lead the pack.

As always, thoughts and comments are welcomed.