But Australia’s top cops in the complex space claim they’re fast adjusting to the quick-moving and transient technology to bring more alleged culprits before the courts – though the fight comes with unprecedented challenges.
Detective Superintendent Amelia McDonald,the head of the AFP cryptocurrency team,and Detective Superintendent Craig Bellis,the head of the AFP’s money laundering taskforce.Louise Kennerley
The AFP’s focus has broadened from some of the most famous currencies,such as Bitcoin,to include stablecoins,which claim to be backed by established currencies such as dollars,pounds,shekels,and roubles,and are therefore perceived to have steadier prices.
The extremely volatile asset class allows bad actors to steal vulnerable investors’ identities and money.
This week a Sydney court is expected to sentence a money launderer who allegedly shifted massive ill-gotten sums using cryptocurrency.
Muhammad Abdullah Cheema pleaded guilty to dealing with the proceeds of crime after NSW Police detectives gave evidence he had taken over bank and crypto-exchange accounts set up for him by a network of associates.
Accounts controlled by Muhammad Abdullah Cheema allegedly received hundreds of thousands of dollars from scams targeting Sydneysiders.Facebook
The exact allegations are still being ironed out by Cheema’s lawyers,but the accounts he controlled,police allege,received hundreds of thousands of dollars from scams targeting elderly Sydneysiders.
The money has not been recovered,police told the courts,because Cheema transferred it offshore.
Detective Superintendent Craig Bellis heads the federal police’s Taskforce Avarus,its joint-agency money laundering arm. In the past three years,Bellis has seen a “significant increase … in the prevalence,the use and the continued expansion of cryptocurrencies” involved in money laundering.
In the 2022-23 financial year,the AFP seized more than $41 million in cryptocurrency,equalling 11.7 per cent of all its seizures.
‘If you walk into a shop in the middle of the CBD that looks like a bank ... you feel confident when you’re providing them with your money.’
Detective Superintendent Craig Bellis
In one operation on February 1 last year,more than $29 million in cryptocurrency purchased with the proceeds of crime was uncovered across 13 Sydney-wide search warrants.
The digital payments were discovered alongside 18 designer watches,17 designer handbags,and at least 46 pieces of luxury jewellery – an insight into how elusive dirty currency feeds the affluent lives of “crypto kings”. The raids also discovered 20 illegally bought properties in Sydney,including two mansions worth a combined $19 million,and more than $1 million in luxury cars – all of which were seized.
These criminals were among the highest-ranking organised crime members in Australia,Bellis said.
“The AFP allege this group were at the centre of a whole range of varying,transnational,serious and organised crime. So by going overt on that group,and taking out that capability,the AFP had a direct impact on multiple criminal groups across this country at the very highest level”.
One of the 46 items of luxury jewellery seized in the police operation.AFP
Detective Superintendent Amelia McDonald,the federal police’s national superintendent for the Criminal Assets Confiscation Taskforce,explained the difficulties in seizing cryptocurrency compared to tangible assets.
“Historically,we’ve trained all of our detectives to have an investigative mindset;now,it’s having a digital mindset as well,” she said.
“So,with a warrant with police searching a house,it’s being able to upskill across the enterprise as to what the investigators should be looking for. The challenge with crypto will be the speed at which it can transfer. And in the absence of that being in our possession … it can dissipate very quickly”.
One police operation included the seizure of more than $29 million in cryptocurrency.AFP
Research shows cryptocurrency is increasingly influencing the black market of drug importation. A 2023 Australian Transaction Reports and Analysis Centre report outlined how law enforcement intercepted many packages containing MDMA and cocaine sent by post from Europe to an individual in Australia. They found he had registered an online account with a black market website and used the account to buy,import and sell illicit drugs using cryptocurrency.
The offender was sentenced to three years and six months in jail. But Bellis said prosecuting these criminals is not easy.
“You can’t get away from the fact that its ability to cross jurisdictions immediately is incredibly appealing to criminal groups,because they can transfer value both domestically and internationally at a moment’s notice,” he said.
“Also,it’s a store of value. If you’ve got $50 million in cash,it’s much harder to hide than on some sort of crypto device – a USB key – whatever it may be. So there’s a number of reasons why and how they’re using it in this space.”
As well as infiltrating the money laundering and drug market,everyday people were falling victim to crypto scams.
Bellis explained offenders exploit both the formal and informal remittance sector. “They operate under the nose of everyday Australians,” he said.
“I think,if you walk into a shop in the middle of the Sydney CBD that looks like a bank,feels like a bank,has customer service,has all their ‘Know Your Customer Regulations’ up on the walls,you feel confident when you’re providing them with your money that it’s getting dealt with the way that it should be.”
Even those looking for love can fall victim to digital deceit. Syndicates use dating sites,employment sites and messaging platforms to gain vulnerable victims’ trust before directing them to subscribe to a financial investment service that deals in cryptocurrency,which have been maliciously manipulated to show a false positive return on investments.
They then manipulate the data to encourage further investment and hide the fact the money has been stolen.
Asked if the AFP has the capability to trace the anonymous blockchains underpinning digital currency,McDonald said:“We absolutely do.”
Without revealing specific methodology,McDonald said the force has the largest dedicated cryptocurrency capability for Australian law enforcement and works with state,territory and international police.
“We have detectives,financial investigators,we have forensic accountants,and the capability of these teams means that they can actually investigate,trace and ultimately help bring them before the courts to prosecute in support of an investigation,” she said. While they have prosecuted more than a dozen criminals related to crypto-scams,they were all in the early stages of court processes,so conviction statistics were not available.
Despite the AFP’s capabilities,there remain undeniable gaps in legislation. And when a case does make it to court,a lack of cryptocurrency literacy makes it difficult for juries to understand the intricacies of alleged crimes.
A 2021 report by the Australian Criminal Intelligence Commission stated it would support “legislation and policies that assist law enforcement agencies to combat crime in the digital domain,the same way they are empowered in the real world”.
Findings from the Australian Competition and Consumer Commission reveal Australians lost $221 million to crypto-related scams in 2022. It prompted Treasurer Jim Chalmers to announce plans to offer greater protection for consumers and review gaps in regulations.
“Australians are experiencing a digital revolution across all sectors of the economy,but regulation is struggling to keep pace and adapt with the crypto asset sector,” Chalmers said at the time.
Whether legislative change can come fast enough to prevent the financial suffering of many more Australians remains to be seen,though McDonald said the AFP was committed to continuing to upskill in the ever-evolving space.
“[Cryptocurrency] is certainly here to stay,” she said.
“You think about five to 10 years ago,we weren’t using our mobile phones or our watches to pay for a coffee … cryptocurrency literacy is not wide-scale yet but people are educating themselves.”
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