London, UNITED KINGDOM – As Europe gingerly continues its foray to embrace cryptocurrencies, Europol, the European Union’s law enforcement agency conferred with over a dozen cryptocurrency exchanges in order to develop strategies to deal with the issue of money laundering using digital assets. Yesterday, Europol kicked off a 3-day conference on cryptocurrencies and cybercrime with sixteen cryptocurrency exchanges, payment processors and digital wallet providers, as well as law enforcement officials from various European Union (E.U.) countries.
Taking place in The Hague, Netherlands, Eurpol said that the conference would discuss “the abuse of virtual currencies for illegal activities” and seek to find ways to “enhance the capabilities of law enforcement.” Cryptocurrencies account for a miniscule 3 to 4 percent of the US$820 million in illicit funds which are laundered through Europe every year. And although, Rob Wainwright, former director of Europol notes that that percentage is going up, cryptocurrencies are not the panacea would be criminals are seeking. Unlike cash, which is virtually untraceable, transactions for most cryptocurrencies are logged on transparent public ledgers, which means that the movement of funds can typically be tracked until they are cashed out into fiat currencies. Europol said the conference would focus on the “tracing and attribution” of digital coins, as well as seek to develop ways to counteract services that make it easier to mask cryptocurrency transactions. Quite the opposite of making the job for law enforcement officials more difficult, cryptocurrencies have actually made it easier to track down and trace illicit funds, with some observers arguing that law enforcement agencies such as Europol should develop a centralized database that flags to cryptocurrency exchanges and digital wallet providers which are linked to criminal activity.
As cryptocurrencies and trading in digital assets grows in popularity and governments in Europe adopt the blockchain technology which underpins cryptocurrencies in various applications, law enforcement agencies are trying their best to keep up to support innovation. According to one attendee of the conference,
“I think we’ve gone past the point where we’re saying we should ban this or ban that, we’re looking at how best we can come up with a law enforcement regime that is practicable for cryptocurrencies.”
And as cryptocurrency activity heats up from Malta to Milan, Europol’s initiative to work with significant crypto players should be welcome. Given that cryptocurrency exchanges, payment gateways and digital wallets are often the gateway to the cryptosphere, that Europol has decided to work with them shows just how far we’ve come.