FBI to reform virtual currency practices following DoJ recommendations

A recently released U.S. Department of Justice audit of the Federal Bureau of Investigation’s (FBI) practices in regards to darknet criminal investigations concluded that the law enforcement agency is in disarray — and an overarching “cryptocurrency support strategy” might be among the solutions. 

According to an unclassified version of the audit released on Thursday, the FBI’s current darknet investigation efforts are — perhaps ironically — hampered by a “decentralized” set of practices, policies, and training programs, as well as compartmentalized intelligence leading to “redundant” efforts.

Notably, the audit found that there are two separate Virtual Currency Teams that assist with darkweb investigations, both of which are funded by the DoJ’s Asset Forfeiture Fund. Additionally, “rising costs and static funding from the Assets Forfeiture Fund resulted in disagreement between these two Virtual Currency Teams on the prioritization of resources”, and many felt that the two Teams conducted overlapping work. 

The Assets Forfeiture Fund receives a portion of its funding through the seizure and sale of property and assets, including cryptocurrency, tied to criminal investigations.

The DoJ made five recommendations to improve darknet investigations and policies, many of which focus on centralizing procedures in order to reduce “ambiguous or overlapping investigative responsibilities”. 

This includes a recommendation to “Develop timelines to obtain feedback from remaining FBI divisions and complete its development of the FBI-wide cryptocurrency support strategy”, and the report indicated that such a timeline is forthcoming.

The DoJ recommendations come at a time when the FBI might soon have more work on its hands due to new regulations. The Treasury’s Financial Crimes Enforcement Network recently proposed new rules that would require exchanges to KYC their customers for transactions over $3,000.