Law enforcement Jul 01, 2020

The US is Targeting Efficient Monitoring of Illicit Crypto Activities

The Organization for Security and Co-operation in Europe (OSCE) sponsors…

The US government has strived to curtail the movement of drugs into the country – the U.S. Drug Enforcement Agency (DEA) has invested big resources into fighting the raging crypto-facilitated opioid epidemic.

A Growing Significance

In the latest events, the agency has focused its attention on the Cartel de Jalisco Nueva Generación, which considered to be the most powerful drug cartel in Mexico that’s been controlling about two thirds of the U.S. drug traffic.

In its 2017 National Drug Threat Assessment, the DEA indicated annual estimates at $64 billion worth of drugs sold in the U.S. the agency acknowledged that darknet platforms and cryptocurrency money laundering was effectively used by drug dealers to hide criminal proceeds.

Further, the agency highlighted the preferences of drug trafficking organizations (DTOs) and money laundering organizations (MLOs) in exploiting known money laundering techniques, which include bulk cash smuggling, trade-based money laundering, and structured transactions made occurring across the legitimate financial sector.

The DEA also intimated that a majority of the money laundering methods used by drug criminals would feature high-dollar financial manipulation and massive transactional volumes that would be used to circumvent the currently existing measures for law enforcement financial tracing.

The Roadmap

The U.S government’s goal for enforcing efficient monitoring of illicit crypto activities can be studied through their concerted effort to bolster the existing cryptocurrency oversight and enforcement frameworks.

The plan, which is set to kick off from October 2020 in pursuit of the 2021 milestone, involves a series of resource mobilization from key government agencies – with figures running into millions of dollars’ worth of new funding.

Point to note, reports claim that the government is considering to purchase a crypto investigations tool called “Coinbase Analytics” – an aspect that is alleged to have irked crypto users, with a host of Bitcoin users withdrawing their holdings to seek other alternatives.

Otherwise, in context of the 2020/2021 roadmap:

Funds for Expanding Cyber and Virtual Currency Compliance Efforts

The Internal Revenue Service Fiscal Year 2021 document lobbied for funding that would enable U.S. law enforcement to “expand cyber and virtual currency compliance efforts”.

The $40.54 million request is reportedly needed to facilitate the hiring of additional special agents that would join the existing law enforcement agencies in tackling criminal cases relating to cybercrime and cryptocurrencies.

A message from the Secretary of the Treasury pointed out a proposal for the return of the Secret Service to Treasury – the move is expected to establish new efficiencies in the investigation of financial crimes as the country braces for future cryptocurrency-backed cybercriminal threats.

The FinCEN Targets International Capacity Building

The Congressional Budget Justification and Annual Performance Plan and Report (financial year 2021) spelled that the Financial Crimes Enforcement Network (FinCEN) has requested for $819,000 in new funding to enable the agency enroll three experts on full-time employment to strengthen its digital currency and cyber threat mitigation program.

According to FinCEN’s rationale, the funding will provide the proper breeding ground for international capacity building that will ascertain the agency’s ability to access critical investigative information across international borders.

FinCEN aspires to mobilize a set of advanced software tools that will be instrumental in expanding the scale of crypto analyses, the corroboration of analyses, and big data analytics capabilities.

Importantly, the capacity building is expected to reflect on the automation of systems – with analytical processes being streamlined to accommodate the concise visualizations of financial and cyber data.


Considering the amount of resources that the U.S. government is seeking to combat illicit crypto activities, the year 2021 may not be “business as usual” for virtual asset criminals.

It is therefore clear that taxpaying citizens with cryptocurrency holdings will be expected to comply with the currently-existing U.S. crypto regulations and the related tax reporting obligations.

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