New powers proposed to enable law enforcement agencies to seize crypto assets

On 22 September, the UK government introduced The Economic Crime Bill. The Bill contains provisions to make it quicker and easier for law enforcement agencies, such as the National Crime Agency, to seize, freeze and recover cryptoassets used by criminals to launder the proceeds of crime.

The Bill contains a number of provisions which, if enacted, will extend considerably the powers of law enforcement agencies. The power to search for, seize or freeze, detain and recover assets will be expanded by amendments to the Proceeds of Crime Act 2002 ('PCA'). 

The new measures will permit law enforcement officers to seize crypto asset-related items even if they are "exempt property", as defined in the PCA. This will enable law enforcement agencies to seize assets that are currently protected if  they are necessary for "employment, business or vocation" . Provided the court is satisfied that the person applying for the order is working "diligently and expeditiously to determine whether the property is a crypto asset-related item", an officer will be able to seize any realisable property.

Moreover, the proposed measures will remove the existing requirement for a suspect to have been arrested before powers to search and seize cryptoassets can be exercised ahead of possible confiscation. An enforcement officer may search for a crypto asset item when they are lawfully on any premises and have reasonable grounds for suspicion. This includes the power to search the suspect's person, as well as entry and search of a vehicle. 

Detention powers for non-exempt cryptoassets will also be increased. A magistrates court may extend the period for which the property is to be detained for six months. In a further extension of its powers a magistrates court will be able to make account freezing and forfeiture orders. These changes mirror the regimes that already exist in the Proceeds of Crime Act 2002, in relation to cash, tangible items and money held in bank accounts. 

The proposed amendments also include the power to dispose of or destroy unclaimed crypto-assets. If a crypto asset-related item which has been released is not claimed within a year, the officer may retain the item and deal with it as they see fit, dispose of the item, or destroy the item. 

Another significant change is an increase in the jurisdiction of the UK criminal justice system. The definition of "UK-connected cryptoasset service provider" widens the jurisdiction of the PCA to all crypto wallet/exchanges that provide services in the UK, who have UK persons as customers and have UK governing law clauses. 

The Bill is due to have its second reading in October and a number of amendments can be expected before the Bill is enacted. We will report further in due course.