Criminals are increasingly using cryptocurrency to conceal and launder the proceeds of illicit activities, but new legal powers are poised to make it harder for them to hide. The Economic Crime and Corporate Transparency Act 2023 (ECCTA), which was introduced in England earlier this year and is expected to come into force in Scotland soon, specifically targets cryptoassets under the Proceeds of Crime Act 2002 (POCA). These enhanced measures are designed to boost law enforcement’s ability to recover assets linked to criminal activity.
Although the ECCTA has not yet been implemented in Scotland, a recent case demonstrated how the existing legal framework can still be used to confiscate stolen cryptocurrency. In what is considered a legal first for Scotland, 29-year-old John-ross Rennie was convicted for his role in a robbery involving the theft of 23.5 Bitcoin. The incident, which took place in March 2020, saw three men armed with machetes enter the victim’s home and force him to transfer the cryptocurrency to an account linked to Rennie.
At the High Court in Edinburgh, Lord Scott sentenced Rennie to a six-month community payback order and 150 hours of community service. While Rennie denied being physically present at the scene, the court found that his involvement was crucial in facilitating the crime. “His role was pivotal,” stated Lord Scott, who concluded that without Rennie’s knowledge, it would have been difficult for the offence to proceed as it did.
Under existing POCA provisions, the court issued a confiscation order for the full amount of Bitcoin stolen, which was valued at nearly £110,000 at the time of the crime. This case illustrates the current capacity of Scottish courts to recover cryptocurrency assets using existing laws, but the upcoming ECCTA will expand these powers even further.
The new legislation will give courts additional authority when it comes to seizing and confiscating cryptocurrency. Currently, courts can issue confiscation orders to banks, requiring them to hand over funds held by an accused person. When the ECCTA is fully enacted, these powers will be extended to include cryptoasset service providers, such as cryptocurrency exchanges and wallet providers. This will allow the courts to compel these entities to liquidate any seized cryptoassets and transfer the resulting funds to the courts in satisfaction of confiscation orders.
Sally Clark, Of Counsel at CMS, welcomed the move, stating, “These new powers will significantly assist law enforcement authorities by widening the circumstances in which their seizure powers can be used for cryptocurrency and other similar assets.” Clark emphasized that the new provisions will help ensure that cryptoassets can be seized more swiftly before they can be dissipated by criminals.
The rise in cryptocurrency-related crimes has put pressure on law enforcement and judicial systems to keep pace with the rapidly evolving digital landscape. The ECCTA aims to provide the tools necessary to combat this growing threat effectively, particularly as cryptocurrencies become a more common means for criminals to hide their ill-gotten gains.
As the law progresses in Scotland, it is expected to empower courts to act more decisively in cases involving cryptocurrency, offering new hope for victims of crypto-related crimes who seek justice. Law enforcement agencies are hopeful that these enhanced powers will lead to quicker seizures of assets and more robust recovery of stolen funds, delivering a blow to criminals seeking refuge in the anonymity of digital currencies.