U.S Develops Cryptocurrency Intelligence Program to combat the Illicit practices in Crypto Industry via Darknet Markets


Department of Homeland Security (DHS) of the
U.S has developed a special Cryptocurrency Intelligence Program that will trace
unregistered crypto businesses that are using P2P sites, darknet markets and
online forums for illicit activities.
To combat such dubious businesses,
Financial Crimes Enforcement Network (FinCEN) has been trying hard and FinCEN
is hopeful that this innovative program will assuage the challenges for law
enforcement.
What is Cryptocurrency Intelligence Program?
Official reports have repeatedly disclosed that
the narcotics industry has been a looming threat over the cryptocurrency
industry and has pushed it towards the uncanny and dubious environment. The
Darknet practices are mounting consistently over the years and in 2019 they got
massive momentum.
SO while releasing the overview of the
budget of the fiscal year 2021, the Department of Homeland Security (DHS) informed
that it has focused on the crypto activity scrutiny programs.
Further,
it informed several measures and cryptocurrency activity monitoring initiations
through the Bulk Cash Smuggling Centre (BCSC). BCSC will provide operational
support in the prohibition and enforcement of cash smugglings and the transfer
of illicit crypto assets.
More about Bulk Cash Smuggling Centre
(BCSC)
Bulk Cash Smuggling Centre (BCSC) had been
established in 2009 by the US Immigration and Customs Enforcement (ICE) to
handle the finance –technological crimes. After the cryptocurrency industry has
flourished over the years, the BCSC has been watching it closely.
The DHS budget also reveals an innovative program
initiated by BCSC which has been dubbed as the Cryptocurrency Intelligence Program
(CIP).
“Cryptocurrency
Intelligence Program identifies unlicensed money services businesses in the
form of independent cryptocurrency brokers' use of peer-to-peer (P2P) sites,
online forms and classified advertisements, and darknet markets (DNM) to engage
in unlicensed Money Services Businesses (MSB) activity."
DHS proclaimed that most of these Money
Services Businesses or MSBs are engaged in money laundering, narcotics
smuggling including opioid trafficking."
Significant challenges from peer-to-peer
platforms and DNM Markets by the unlicensed businesses have been creating a nuisance
to the US Immigration and Customs Enforcement (ICE) department in the last few
years. ICE had raised concerns over the illicit activities that have posed a
big challenge for law enforcement.
Cryptocurrencies and Bitcoins are the popular
options of payment in the darknet markets. It is a common and popular practice
to trade the illicit goods and services via the cryptocurrencies.
ICE confirmed that the biggest problem in
the darknet market is the conversion of virtual currency into traditional Fiat
currency. To avoid the legal complexities illicit vendors transact through the
exchangers or become P2P exchangers to liquidate their virtual currency.
Currency exchanges including the
cryptocurrencies are considered as a money transmitter and fall under federal
anti-money laundering regulations. They are required to be registered under the
Financial Crimes Enforcement Network (FinCEN) as a money service business.
In its last report published in May last
year, FinCEN mentioned its observation that unlicensed entities knowingly or
unknowingly are allowing their platforms to be used for criminal activities.
Including through darknet marketplaces, cross border located MSBs, P2P
exchanges, and Convertible virtual Currencies (CVC) kiosks.
The U.S Immigration and Customs Enforcement
Department ICE further said that the current US regulatory framework for money
transmission is not adequate to combat the ongoing crypto activities. So the
ICE authorities have been successful to restrict illegal activities up to a certain
level and have charged and penalized few illegal P2P exchange service
providers.
The US Office of the Director of National
Intelligence stated, “A global cryptocurrency or a national digital currency
could undermine the US dollar. It is now looking for researchers to evaluate
this threat and impact of the US dollar losing its status as the world's
reserve currency.”

Jayashree Ingle
CBW - External Analyst
INDIA
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