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Australian Federal Investigators Look at Bitcoin’s Organized Crime Role


December.03.2014 0 Comments

bitoin-policeOne of Australia’s primary national law enforcement agencies, the Australian Crime Commission (ACC), is investigating bitcoin’s role in organized crime in an official operation known as ‘Project Longstrike’.

According to a report published by Reuters earlier today, ACC Executive Director Judy Lind said that investigators were aware of and would be monitoring “misuse of virtual currencies to facilitate criminal activity.”

She said:

“Organized crime groups continue to make use of darknets to harbor trading in illicit commodities, including child exploitation material, illicit drugs and firearms, stolen credit card and identity data, and hacking techniques.”

The ACC is Australia’s national criminal intelligence and investigative agency, concerned mainly with major organized crime including drugs, money laundering, terrorism and corruption.

Warming environment

The ACC’s latest announcement comes as Australia’s politicians and regulators have recently begun to warm to bitcoin, and the country’s prospects as an innovation leader in developing the new technology.

The Australian Tax Office issued guidelines in August detailing how it would tax bitcoin use for businesses and individuals.

A Senate inquiry, which held its first hearings just last week, has heard mainly positive testimony regarding digital currency’s promise and has invited all interested parties to submit recommendations for its consideration.

One negative voice of note belonged to Mastercard, whose inquiry cited bitcoin and Ripple as two predominant digital currencies and warned of bitcoin’s volatility, anonymity, facilitation of illegal activities and lack of consumer protections as arguments for greater regulation.

Not the first time

This is actually not the first time the ACC has taken an interest in bitcoin. The agency referred to bitcoin and its “anonymous” nature three times in its Organized Crime in Australia 2013 report, saying:

“The unregulated environment and the anonymity of transactions make currencies such as bitcoin attractive to organised crime for money laundering.”

In June 2013, the ACC’s acting chief executive Paul Jevtovic also cited bitcoin’s “anonymity” in a newspaper interview, saying: “The ACC is currently working with partners to explore the bitcoin market and other digital currencies, to better understand its size and criminal threat”.

Bitcoin industry view

Jason Williams, president of local Bitcoin Foundation chapter the Australian Bitcoin Association, told CoinDesk that bitcoin offers the world many advantages beyond semi-anonymous payments. These include financial inclusion for more people, overall cost of payments and the security of a financial supply that cannot be tampered with.

As for bitcoin’s role in crime, he said:

“Financial crime will continue irrespective of the financial system involved. It is important to realise that as with anything new, there is both an adoption and learning curve and that bitcoin and cryptocurrencies are not immune to police action.”

Australia and dark markets

Despite the ACC’s concerns, Australia remains one of the world’s toughest destinations for illegal goods shipments. Several online dark marketplaces and forums have warned the country’s Customs Service is particularly effective at intercepting unlawful packages and some vendors will not ship there at all.

Just last week, the Australian government extradited Brisbane resident Peter Nash to face trial in the US over his alleged role as ‘primary moderator’ of the original Silk Road marketplace, which was shuttered by the FBI in October last year.

In October this year, Queensland police seized the state’s first bitcoin ATM from a coffee shop as part of a drug bust, though it has never been ascertained whether the machine was in any way involved in illegal activity.

Another alleged Silk Road participant, Richard Pollard, had 24,500 BTC seized by the state of Victoria, which the Department of Justice is reportedly planning to sell at auction.

Formed in 2003, the Australian Crime Commission is a federal agency “empowered to conduct special investigations and special operations where conventional law enforcement methods are unable or unlikely to be effective. This includes the use of coercive powers.”

These powers include the ability to summons witnesses and compel them to provide evidence about themselves or others, and to seize any documents relevant to an investigation.