New UK Legislation Enables Swift Crypto Freezing by Law Enforcement

A forthcoming bill in the United Kingdom is poised to grant local authorities enhanced capabilities to freeze and confiscate cryptocurrency assets associated with criminal activities. Experts believe this legislation could expedite asset freezes in criminal cases and potentially bolster public funding by millions.

The Economic Crime and Corporate Transparency Bill, scheduled for enactment later this year, empowers local courts and law enforcement agencies to freeze crypto assets believed to be involved in money laundering, drug trafficking, cybercrime, and terrorism. Unlike current practices that necessitate an arrest or conviction before seizing tainted crypto assets, the new bill eliminates this requirement, enabling quicker action to block the movement of targeted assets.

In the realm of time-sensitive criminal investigations, the ability to swiftly issue freeze orders is seen as a significant advantage. Legal experts anticipate a substantial increase in the recovery of digital assets through the enforcement of this new bill.

Key provisions in the bill facilitate the seizure and recovery of crypto linked to criminal activities under the Proceeds of Crime Act 2002. Unlike the existing process that demands an arrest or conviction, the bill allows courts to order asset confiscation before an arrest occurs. Although assets can be frozen to prevent movement, a formal seizure is contingent on an arrest or conviction.

The bill introduces civil forfeiture powers, enabling the seizure of crypto linked to crime irrespective of whether an individual is convicted. This can occur during ongoing investigations or legal proceedings, providing law enforcement with additional tools to combat criminal activities funded by cryptocurrency.

The accelerated process of freezing crypto assets, without waiting for an arrest, addresses delays in enforcement work and minimizes the risk of funds being swiftly moved, a critical consideration given the rapid nature of cryptocurrency transactions.

U.K. law enforcement has already seized millions of pounds worth of cryptocurrency, with the new bill expected to enhance these efforts.

While acknowledging the financial contribution from seized assets to law enforcement agencies and economic crime initiatives, underscores the ongoing need for increased funding to combat crypto-related crime effectively. The U.K. government's plan to allocate £100 million ($124 million) to fight economic crime over three years is deemed insufficient, making the new seizure powers crucial in pursuing additional millions in crime proceeds.

However, legal experts caution that as the U.K. improves its ability to seize crypto assets, criminals may respond by moving their funds offshore to jurisdictions with less rigorous oversight. This potential challenge highlights the need for ongoing international cooperation to address the global nature of cryptocurrency-related crimes.