Criminal use of crypto an ‘emerging threat’ — Australian police

Law enforcement will need to “continually evolve” in order to keep pace with criminals, Australia’s federal police said.

Australia’s federal law enforcement agency has highlighted the criminal use of cryptocurrency as an “emerging threat” in the country but says it’s a continuous challenge to keep up the pace with criminals. 

A spokesperson for the Australian Federal Police (AFP) told Cointelegraph that there has been an “increase in the number of offenders using cryptocurrencies to facilitate illicit business and attempting to conceal the ownership of assets,” noting:

“The criminal use of cryptocurrency is an emerging threat for law enforcement.”

However, they admitted the biggest challenge for law enforcement is to “continually evolve” their “tools, techniques and legal frameworks” to keep pace with criminals, particularly as mainstream adoption of cryptocurrency increases.

Last month, the AFP established a new cryptocurrency unit focused on monitoring crypto-related transactions.

However, the spokesperson said that despite the previous establishment of crypto-focused units, “criminals are continuing to find opportunities to avoid law enforcement and exploit the public.”

Misplaced focus? 

One Australian private investigator believes the AFP is yet to focus on the “prolific and profitable” crypto crime yet — online investment fraud.

IFW Global executive chairman Ken Gamble told Cointelegraph that most of the AFP’s focus recently has been on crypto money laundering relating to drug trafficking, cyber intrusion, ransomware, email compromise and hacking, but not “large-scale online investment fraud.”

Scamwatch data between January and July this year found that Australians had lost 242.5 million Australian dollars ($152.6 million) to scammers in 2022 already, with the majority of funds lost to investment scams, including romance baiting scams, classic Ponzi schemes and cryptocurrency scams.

The figure is already 36% higher than the that of the whole of 2021.

The investigator also believes that some law enforcement departments are still not fully equipped to handle crypto crime cases adding that “law enforcement agencies need better training and education on how cryptocurrency works.”

A report from analytics firm Chainalysis in July found that 74% of public agencies felt under-equipped to investigate cryptocurrency-related crime, with respondents indicating that many agencies did not use specialized blockchain analytical tools.

“There is a shortage of professional and certified cryptocurrency tracers rapidly involving the criminal industry,” said Gamble.

Related: Put your hands up! Interpol storms into the metaverse

This may be soon to change, with a number of international and national authorities announcing the establishment of crypto-crime-focused units this year.

Meanwhile, Interpol (International Criminal Police Organization) recently set up a special team in Singapore to help the government fight crimes involving virtual assets.

Interpol secretary Jürgen Stock stated at Interpol’s general assembly in India on the need for further training in crypto for law enforcement, saying cryptocurrency “poses a challenge,” as agencies are “not properly trained and properly equipped from the beginning.”

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Investigations by Indian law enforcement agencies helped reduce cryptocurrency scams in Austria and other European countries. Austria’s Federal Police and Director of Criminal Intelligence Service, General Mag Andreas Holzer, told this and complimented the representatives of India’s Central Bureau of Investigation (CBI) on the sidelines of the Interpol general assembly held during October 18-21 in […]

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Australia's markets regulator to prioritize shielding citizens from crypto harm

Australia’s markets regulator to prioritize shielding citizens from crypto harm

Part of its actions will include raising public awareness about the risks inherent in crypto-assets and decentralized finance.

Australia’s financial regulator, Australia’s Securities and Investments Commission (ASIC) has pledged to put crypto assets and decentralized finance (DeFi) firmly in its sights over the next four years. 

According to ASIC’s newly released “Corporate Plan” released on Aug. 22, the financial regulator said it will be focusing on “digitally enabled misconducts” as “emerging technologies and products change our financial ecosystem” as part of its four-year strategic plan which stretches to 2026. 

Joe Longo, chair of ASIC said the regulator would be focusing in particular on scams and crypto-assets.

“Our regulatory environment is changing and evolving — climate risk, our aging population, emerging data and digital technologies, and significant volatility in the crypto-assets market are all having a transformational impact.”

He noted that Scamwatch, a website that provides information to consumers and businesses about recognizing, avoiding, and reporting scams, received 4,783 reports of crypto investment scams and $99 million in reported losses in 2021.

ASIC said the actions will “protect investors from harms posed by crypto-assets” and include supporting the development of an effective regulatory framework, implementing and monitoring the regulatory model for exchange-related products, and raising public awareness of the risks inherent in crypto-assets and DeFi, among other actions.

In a Aug. 23 Sydney Morning Herald report, Longo again warned against investing in crypto, describing it as “a highly risky and highly volatile activity,” and consumers “should be really careful before you do it.”

“ASIC is not against innovation, and will do whatever it can to look for lawful ways of using the underlying technology, the distributed ledger, and blockchain technology, but that’s not to be conflated or confused with investing, inverted commas, in crypto assets.”

ASIC’s announcement came only days after Australia’s new ruling government announced plans to move forward with regulation of the crypto sector by conducting a “token mapping” exercise by the end of the year.

Regulation could be a step closer

Cryptocurrencies and digital exchanges are only loosely regulated at the moment, with exchange operators only required to abide by Australian Transaction Reports and Analysis Centre’s (AUSTRAC) anti-money laundering laws and the general provisions of the Corporations Act.

Related: Australia’s new government finally signals its crypto regulation stance

The industry has been calling for government legislation to reduce the risk for investors and transform cryptocurrencies into an established, safer asset class.

However, there are thousands of crypto assets or currencies and Longo admits “regulation is coming” but “we will have to design a framework that suits us, that works within our existing legal and regulatory arrangements.” 

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Australia’s Northern Territory mulls landmark crypto gambling regulation

Australia’s Northern Territory mulls landmark crypto gambling regulation

“It’s clear from the draft framework that what they’re looking at is wagering using cryptocurrency,” said Julian Hoskins, the principle of gambling law and regulatory advisory firm Senet.

Australia’s Northern Territory Racing Commission (NTRC) is consulting with its gambling licensees over a tentative proposal to incorporate crypto wagering as part of the regulated gambling industry.

For the most part, gambling in Australia is regulated at the state level and not federally. The NTRC oversees all gambling and wagering companies that choose to be licensed in the Northern Territory (NT), including global wagering companies such as Betfair, Entain Group, Draft Kings and Sportsbet.

As it stands, the NTRC has sent a private document out to licensees, which seeks input and feedback on what the regulatory landscape could look like to get crypto wagering off the ground in the NT.

Julian Hoskins, the principle of one of Australia’s major gambling law and regulatory advisory firms Senet, has been given access to the private document and discussed with Cointelegraph what the NTRC is looking for at this stage:

“What it provides for is a licensee, say a sports bookmaker who holds a license in the Northern Territory, who wants to accept cryptocurrency for striking or paying out wages, [is that they] need to apply for consent to be able to do that. And there’s certain conditions that attach to that.”

“Now it’s clear from the draft framework that what they’re looking at is wagering using cryptocurrency, and not exchanging into fiat,” he added, noting that punters will most likely need to place fiat and crypto bets separately on the one platform, as the two financial tools won’t be interchangeable with each other for gambling.

While the prospect of such a move is hard to quantify at this stage, Hoskins stated that “given the popularity of crypto, I would imagine that this would be very popular as an alternative to fiat. I think it’s got the potential to be quite material.”

He added that if this model went according to plan in the Northern Territory, other state gambling regulators would likely follow.

Hoskins also noted that stringent identification requirements have also been proposed to keep in line with anti-money laundering (AML) regulations. As such gamblers will most likely need to have their crypto wallet addresses verified, and any winnings will need to be withdrawn “back to the same wallet” that made the initial deposit.

“What they’ll require under the draft framework is a verification of the crypto wallet. So it needs to be verified and registered against a customer’s identity. And the customer has got to prove that they control that wallet,” he said.

Hoskins also outlined that the NTRC has recommended monthly crypto deposit limits worth $2,000 AUD for the first 12 months, with a max wager of $5,000 AUD per month also.

The gambling-industry lawyer also explained that local gambling companies will be legally required to maintain crypto wallets that hold enough funds to fully collateralize customer wager amounts, as per the common practice in fiat-based gambling.

In terms of the tax implications of using volatile crypto assets to gamble, Hoskins said he didn’t know “how that would be treated,” suggesting the NTRC is still pondering such issues.

The NTRC appears to have changed its tune on crypto significantly, given that it previously ordered gambling firms such as Neds to “cease and desist” Bitcoin (BTC) wagering back in 2018.

Related: Australia’s new government finally signals its crypto regulation stance

Jamie Nettleton, Partner at Sydney-based commercial law firm Addisons, also spoke to Cointelegraph and emphasized the significance of the move from the NTRC.

“The NTRC consultation paper is the first indication by an Australian gambling regulator of a willingness to consider the use of cryptocurrency,” he said, adding that:

“To date, any Australian wishing to utilize crypto in gambling must do so overseas with a party likely to do so illegally ( at least from the perspective of Australian gambling law.). This paper is a welcome change!”

This comes just a couple of days after the recently elected Australian Labor Party (ALP) finally announced an approach to crypto regulation. Treasurer Jim Chalmers announced a “token mapping” exercise that is expected to help “identify how crypto assets and related services should be regulated.”

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