Background
It was recently reported that INTERPOL has formed a specialist team to help countries combat crimes involving cryptoassets.
As we have previously written, there have been increasing reports of countries using INTERPOL to pursue individuals alleged to be involved in criminal activities related to cryptoassets.
What is Operation First Light?
Operation First Light is a global police operation spanning 61 countries, targeting online scam networks and dedicated to disrupting the transnational organised crime networks.
How has Operation First Light done this?
In is tenth year, Operation First Light has resulted in the freezing of 6,746 bank accounts and asset seizures amounting to USD 257 million in operations across 61 countries.
Recent successes include the interception of email-based scams between Spain and Hong Kong, impersonation scams in Australia, and the dismantling of a fully-fledged scam network in Namibia.
What is the connection with cryptoassets?
In addition, it has been reported that $2 million in cryptocurrency has been intercepted as part of Operation First Light.
Can this operation be deemed a success?
While the USD 135 million recovered in fiat currency and USD 120 million in other assets are significant, the USD 2 million in seized cryptocurrency is relatively small compared to INTERPOL's estimates of annual crypto theft. Their most recent Dark Web report saw crypto theft and fraud valued at 841 million with the year-on-year increase marking a 'disturbing trend'.
Suitability of INTERPOL
There is no doubt that crime involving crypto presents unique challenges to authorities due to the decentralised nature of crypto and the distance from conventional financial institutions.
The UK has published legislation enabling authorities to investigate and seize assets used in criminal activities relating to crypto (please see our other blogs on crypto regulation).
Other INTERPOL members, however, may not be as quick in establishing a regulatory framework, making international cooperation even more challenging.
Despite these challenges, INTERPOL's global reach makes it well-suited to coordinate international efforts to pursue individuals alleged to have been involved in crypto-related criminal offences and trace associated proceeds.
As always, it is essential to ensure that INTERPOL is always used in compliance with all applicable rules and regulations.
International dimension of offences involving crypto
Using INTERPOL to pursue allegations involving cryptoassets is not unheard of. Following earlier reports that South Korea had asked INTERPOL to issue a Red Notice for developer Do Kwon, who is the founder of the failed crypto currency Terra, Gherson's criminal litigation, investigations and regulatory team wrote a blog titled "Can INTERPOL issue a Red Notice in relation to allegations involving crypto?".
INTERPOL was also involved in attempting to locate Ignatova Bajatova, who was involved in the OneCoin scandal.
As well as being at risk of INTERPOL measures such as Red Notices, those who fear that allegations involving crypto have been made against them could also be at risk of extradition.
As was discussed in a previous blog entitled "Can I be extradited for allegations involving crypto?" and "Another US crypto extradition", due to the borderless nature of crypto transactions, any allegation of criminality will inevitably involve multiple jurisdictions. As such, there may be numerous jurisdictions asserting jurisdiction and trying to extradite an alleged perpetrator to their jurisdiction to face justice. Indeed, there have now been two examples of individuals being extradited to the US in relation to allegations involving crypto.
The vast majority (if not all) of criminal allegations that underpin a crypto criminal investigation are of a financial crime nature, e.g. fraud, money laundering and insider dealing. They can also include alleged offences relating to the breach of financial regulations.
These offences often occur across multiple jurisdictions, allowing countries to assert jurisdiction even for conduct outside their borders (hence extradition can be an option).
Indeed, due to the borderless nature of the effect of these crimes, a jurisdiction could assert jurisdiction against an individual who has not even stepped foot in that country.
As such, jurisdictions might additionally utilise INTERPOL to locate an individual and seek their arrest prior to issuing any extradition request.
Therefore, as crypto technology becomes more prevalent, the use of INTERPOL to locate individuals accused of allegations involving crypto is likely to increase.
International crypto dimension – criminal investigations, litigation and extradition
Individuals concerned about potential extradition or liability across multiple jurisdictions, including the UK, should get in touch.
Gherson's criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned with a firm understanding of digital assets and blockchain technology. As such, the team are able to provide expert strategic advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets. Working alongside the extradition team, Gherson's criminal litigation, investigations and regulatory team are able to provide an unparalleled service in any case with an international dimension. The team are also able to call upon lawyers in multiple other jurisdictions and build multi-jurisdictional teams to assist with any suitable defence.
INTERPOL, Red Notices and crypto
In addition, those who fear that a jurisdiction may have requested INTERPOL to process data relating to allegations of crypto offences, or are just concerned about potential liability, should get in contact.
Indeed, Gherson Solicitors continue to receive requests for expert advice and assistance from those who fear they may have outstanding financial issues arising. That advice tackles:
- How to best approach a possible INTERPOL red notice;
- Preparing for potential criminal proceedings / an extradition request;
- Preparing for a situation where a civil matter or commercial dispute could be used to initiate bogus criminal proceedings; and
- Even exploring the possibility of instigating civil litigation proceedings to recover any misappropriated assets.
Gherson have previously written a series of blogs designed to assist those who fear they might be subject to INTERPOL measures (including a Red Notice):
INTERPOL and Red Notice Challenges
How to Remove an INTERPOL Red Notice
INTERPOL Red Notices and Extradition
How do I know if I am subject to an INTERPOL Red Notice
Regulation and compliance
In these constantly changing times, firms that deal with cryptoassets, and additionally have exposure to firms that do, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations.
Originally published by 18 July, 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.