Economic Crime and Corporate Transparency Bill: provisions for crypto fraud

The Economic Crime and Corporate Transparency Bill, set to be enacted this year, would give courts and law enforcement agencies new powers to help freeze crypto assets they believe were used to launder money, traffic drugs, and commit cybercrime and terrorism. Provisions in the Bill will allow crypto assets linked to criminal activities to be seized and recovered under the Proceeds of Crime Act 2002. These provisions are especially important due to the fact the crypto industry is still largely unregulated in the UK.

The Bill will provide additional powers to law enforcement so that they can recover crypto assets which are the proceeds of crime or associated with illicit activity, such as money laundering, fraud and ransomware attacks quickly and easily.

The Bill will principally amend the Proceeds of Crime Act 2002 (POCA) to more effectively tackle criminal use of crypto assets and it follows on from the Crime (Transparency and Enforcement) Act enacted earlier this year.

What can the courts do?

The Bill allows for the courts to order the confiscation of assets before an arrest is made. Though assets can be frozen to prevent movement, they still can’t technically be seized from suspects until an arrest or conviction (or other order of the court) has been made. This will be useful to seize crypto assets that are linked to criminality, even where the fraudster in the investigation is unlikely to face justice in the UK, possibly due to the fraudster committing the crime overseas. This will provide victims of crypto fraud with more security due to the fact that many countries do not have or are in the process of developing crypto regulations.

This will also enable the police to cut delays in enforcement work and prevent funds from being moved, as crypto assets can be moved or transferred very quickly – at the push of a button.

In addition, the Bill sets out reforms to Companies House that introduce identity verification for all new and existing registered company directors.

This new Bill is another welcome step in the clamp-down on the crypto sector. In the wake of the FTX scandal and the crypto winter, the sector needs regulation and security to ensure it continues to thrive. This is an important step in the UK’s regulatory regime as digital assets are here to stay, and the UK needs to get the regime right to remain as a market leader in the sector.

If you have any questions on the regulation of crypto issues or suspected crypto fraud, please contact Louise Abbott.