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

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Jayashree Ingle Follow


Mar, 02 2020

Mar, 02 2020

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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.”

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Jayashree Ingle

CBW - External Analyst


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