The short answer is "yes".
On 26 April 2024, the revised codes of practice for extending powers under Proceeds of Crime Act 2002 ("POCA") to seize and detain property (including cryptoassets) came into force.
The amendments changed the existing powers in two main ways.
Amendments to search and seizure powers
The amendments to the POCA search and seizure powers ultimately broaden these powers to address novel features of the technology underlying cryptoassets.
Therefore, the new powers specifically permit the seizure of not just cryptoassets, but items of free property which officers believe may hold information that may lead to the seizure of cryptoassets.
In summary, the amendments will permit:
The powers of seizure to be used in some circumstances before an individual has been arrested, therefore assisting with preventing the chances of dissipation of cryptoassets.
An enforcement officer to search premises, vehicles and persons for a cryptasset-related item.
The seizure of a cryptoasset by transferring it into a crypto wallet controlled by the appropriate officer.
The appropriate officer to detain for 48 hours any cryptoasset-related item or any cryptoasset.
By Court order, the continued detention of a cryptoasset-related item or any cryptoasset for up to a maximum of two years (which can be extended to three years where there is an outstanding request for evidence from overseas); and
The destruction of cryptoassets in circumstances where their recirculation would facilitate criminal conduct by any person.
We have explored these new powers in much more detail in our blog:
Building on the above, for circumstances where an officer has information that enables them to trace cryptoassets to a centralised service provider, the officers can now apply to freeze the cryptoassets stored on a centralised exchange.
Additional powers against centralised service providers, such as crypto-exchanges and custodian wallet providers
A key to equipping law enforcement with the tools to seize and recover cryptoassets is to provide powers to take actions against centralised intermediaries (such as exchanges and custodians), where cryptoassets are exchanged and/or stored in a centralise entity.
As such, UK Law enforcement can now apply for a Crypto Wallet Freezing Order ("CWFrO"), which is a Court Order freezing some or all of cryptoassets held in a crypto wallet administered by a UK-connected cryptoasset service provider.
We have explored CWFrO's in much more detail in our blog:
What is a crypto wallet freezing order?
How to respond to a Crypto Wallet Freezing Order or a Crypto Wallet Forfeiture Order
A CWFrO may be made with or without notice; as such, the first time you may be aware of an CWFrO is when you are notified that one has been granted.
Applying for an CWFrO and, if applicable, an Crypto Wallet Forfeiture Order ("CWFO"), involves the relevant agency taking a staged approach and it is important to adopt a strategic response accordingly.
As such, the most effective response will often involve a combination (or all) of the following (non-exhaustive) steps:
- engaging with the relevant agency;
- attending an interview (if appropriate);
- making written representation accompanied by evidence;
- trying to establish that there are (or were) insufficient grounds to persuade the Court to grant the CWFrO and/or that there are insufficient grounds to persuade a Court to grant a CWFO; and
- establishing any procedurally incorrect actions taken by law enforcement.
Given the higher standard of proof which law enforcement needs to satisfy at the CWFO stage, it may be better for the account holder in some cases to contest the matter at this stage.
It is critically important that the appropriate steps are taken during the investigation stage, as these should bolster representations made if the matter does end up at a full forfeiture Court hearing. As such, early expert legal advice is always recommended.
Gherson's white-collar crime team bring expertise from both sides of the fence through experience leading investigations into financial crime and also representing individuals subject to such investigations. As such, they are able to offer a bespoke and insightful strategy to provide the best chance to head off any investigation at as early a stage as possible.
Increased reports of crypto fraud and scams – More from Gherson
The team have previously written a blog entitled What to do if you think that you have been victim to a crypto fraud or scam. This followed an earlier blog entitled What can you do to try and help avoid a crypto fraud of scam and a blog entitled What to do if your NFT has been stolen.
Reports of crypto frauds and scams remain on the increase. A recent article by Cyber reports how around £1 million-worth of cryptocurrency scams are being reported by Santander UK customers each month. This article quoted Thomas Cattee, Solicitor in Gherson's criminal litigation, investigations and regulatory department.
Criminal investigations and litigation
Gherson's solicitors criminal litigation, regulatory and investigatory team combine an expert knowledge of criminal and regulatory law underpinned with a firm understanding of digital assets and blockchain technology. As such, the team are able to provide expert strategic advice to anyone wanting to investigate and pursue a potential theft of crypto assets.
The team are also able to provide advice to anyone facing investigation in relation to any allegation of criminality involving cryptoassets.
Regulation and compliance
In these constantly changing times, firms that deal with cryptoassets, and additionally have exposure to firms that do, will need to carefully consider all their systems and controls to ensure that they are able to comply with all relevant AML and sanctions regulations. Gherson's white-collar crime and regulatory team are able to provide advice and assistance with AML and sanctions compliance, including in situations involving cryptoassets.
Additionally, the team have recently started a series on the regulation of crypto, with the aim of advising those who work in the compliance of this sector. In addition, for those who would like advice on relevant issues, including those who have had issues with the FCA registration process, our specialist regulatory and compliance team can guide individuals and companies through the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.