DOJ report: Information sharing, AML/CFT measures key to fighting international digital crime

The U.S. Department of Justice (DOJ) released a report on international law enforcement related to digital assets on Tuesday. This is the first of about a dozen reports mandated by President Joe Biden’s March 9 executive order “Ensuring Responsible Development of Digital Assets.”

The report, "How to Strengthen International Law Enforcement Cooperation to Detect, Investigate, and Prosecute Criminal Activity Related to Digital Assets," was sponsored by the U.S. Departments of State, Treasury, and Homeland Security, as well as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission. (CFTC) co-authored.

Countries vary in their ability to tackle criminal activity due to the unique law enforcement challenges associated with digital asset transactions, such as the anonymity and instant ability to cross borders, the report said. It lists criminal activities such as money laundering, ransomware campaigns, cybercrime, fraud, theft, terrorist financing and evasion of sanctions.

Weak anti-money laundering (AML) and countering the financing of terrorism (CFT) enforcement, limited legislative frameworks and lack of expertise in the face of evolving threats are also barriers to effectively combating transnational crime.

Information sharing is a critical component of international law enforcement efforts, but effective information sharing among U.S. agencies is necessary for the success of international efforts, and a whole-of-government approach can improve overall law enforcement effectiveness, the report noted. The United States has signed several agreements and organizations, such as the Financial Action Task Force (FATF) and the International Organization of Securities Commissions (IOSCO), to improve information sharing.

The report's recommendations are primarily for more of the same collaboration and information sharing. It is particularly detailed in addressing the need for enhanced AML/CFT regulation. According to the report, criminals are able to exploit judicial arbitrage:

“Partners are encouraged to review and weigh the reputational and national security risks and policy implications associated with allowing certain virtual asset businesses to operate within their borders.”

Many U.S. agencies have international training and outreach efforts that help fight international crime.