On February 26, US Deputy Attorney General Rod Rosenstein stated during a discussion at the Financial Services Roundtable that the US Department of Justice (DOJ) had recently formed its own cybersecurity taskforce, who is currently in the process of developing a “comprehensive strategy to deal with” the usage of cryptocurrencies for money laundering cases.
According to Rosenstein, there is an “increasing volume of organized cybercriminal activity,” with many of the strategies employed by criminals involving “bitcoin and other cryptocurrencies which do not flow through the traditional financial system,” allowing them to hide the origins of their funds.
The DOJ has decided to return to the drawing board in order to reconsider new possible methods of identifying money laundering operations as conventional approaches have proven to be ineffective in the matter.
“Increasingly,” Rosenstein states, “every case we deal with winds up being in one way or another a cyber case: either it’s executed using cyber tools, or the proceeds are transferred electronically, or the evidence is stored electronically.”
When asked if he is concerned about the nature of cryptocurrencies that allows their users anonymity, Rosenstein stated:
“It’s not true that anything is really fully completely anonymous, right? We all know that there are ways to trace criminal activity… there will be other ways that people leave trails and ultimately, even if they’re dealing in cyber currency they’re ultimately going to try to convert that – launder it- into physical currency, and so there are ways to trace these cases, but it requires a lot of sophistication.”
Rosenstein admits that one of the DOJ’s significant challenges is retaining their personnel after training them in cybersecurity, as their skill sets and knowledge make them valuable assets to entities in the private sector.
Due to their perpetrators often living outside the US, Rosenstein also notes that there is an inherent difficulty with prosecuting cybercriminal cases. However, he also states that the DOJ has “had some success in successfully gaining custody of cyber criminals, sometimes by catching them in third countries that do cooperate with us, sometimes by pursuing extradition.”
A Russian national by the name of Alexander Vinnik, who is suspected to have laundered stolen funds when he was operating the crypto exchange BTC-e, is expected to be extradited to the United States, despite Russian attempts to incriminate him in his own country.
Rosenstein also said to the audience that “every new technology finds early adopters in people with criminal intent, and cyber currency is no different.”