Cryptocurrency: Police hunt for wallets, not money laundering

Cryptocurrency: Police hunt for wallets, not money laundering

There are possibilities of money laundering via illegal cryptocurrency transactions made by those arrested at different times, but police could not launch any such investigation against them owing to a lack of required technological support and expertise.

Law enforcement agencies have already identified cryptocurrencies as a new means of money laundering and illegal financing. They also came to know that such illegal virtual coins are used for online gambling, gaming, terror financing etc.

Over the last five years, different units of police conducted at least 15 drives and arrested at least 27 people in connection with bitcoin trading, according to sources at different police units.

When it comes to probing such cases all they have done is identify their digital wallets and charge under the Digital Security Act.

Information regarding cryptocurrency transactions remains secure through the blockchain network. A blockchain is a type of digital ledger that consists of a growing list of records, called blocks, that are securely linked together using cryptography that cannot be tampered.

Two internet users themselves, with disclosure of identity, can directly transact the virtual currencies. With opening a 2734 digit-long internet account and ID, they can transact currency virtually.

Police have so far filed chargesheets in four out of nine such cases. The remaining five cases have hung in the balance as they have not got forensic reports yet.

In May last year, the Rapid Action Battalion arrested a racket of 12 bitcoin traders, a mastermind, at Uttar Badda in Dhaka in connection with illegal bitcoin transactions and also seized 29 computers, mobiles and other documents. 

Their kingpin Ismail Hossain Sumon was operating a bitcoin business in the guise of online outsourcing. He employed 32 staff to maintain the illegal business

The RAB then said it was the biggest bitcoin trading group in Bangladesh and everything about illegal transactions would come to the fore after a thorough inquiry for finding evidence of money laundering if there was any. 

The Criminal Investigation Department (CID) was later entrusted with the job, but it could complete the inquiry albeit a year went past.  

The people concerned say the inquiry did not make headway as the forensic report of the seized digital devices did not reach them. 

The RAB had also arrested 29-year-old Raihan Hossain, an alleged mastermind behind an illegal bitcoin operation, from Gazipur in January 2021. The RAB claimed Raihan as the most skilled among bitcoin traders.

There is a strong possibility of money laundering by him, the CID could not complete an enquiry into this case too. 

Seeking anonymity, an official engaged with police investigation told TBS, “We do not have expertise in bitcoin related technologies. That is why we cannot carry out proper investigation. 

Unless they are given necessary training and devices, neither inquiry nor investigation will speed up, he said.

In a few instances, police are competing investigations only after coming to know about virtual wallets of cryptocurrency traders.

In 2019, a cyber police team of Bogura arrested two people for their alleged involvement with cryptocurrency transactions. Later, the investigation of the case was completed once their digital wallets were found.

An officer involved in the investigation of the case told TBS that they had been trading bitcoins for a long time. Information of transactions of more than Tk1 crore was initially found in the investigation, and the charge sheet was given based on that. 

“If we inquired about their mobile banking transactions and other matters, it would be known whether anyone else had done transactions through them or whether any other groups are involved,” he said. 

Training on cryptocurrencies planned but not executed yet

Earlier this year, the home ministry sent a letter to the Police Headquarters based on an intelligence agency’s report on cryptocurrencies. In the letter, the government directed the cyber unit of the police and members of the intelligence agency to acquire technical skills through training, and procurement of modern equipment and software.

The letter also recommended providing training to members of law enforcement agencies, financial institutions and officials of related ministries in modern information and knowledge related to bitcoin technology.

At that time, the police officials concerned said CID officials held several meetings with Interpol and the Federal Bureau of Investigation to control crimes via cryptocurrencies. They will give some basic training to control these crimes. 

However, surveillance equipment has not been bought yet as these are very expensive. Apart from this, South Korea will train police and other law enforcement agencies for three years to control crime through dark web and cryptocurrency. This training will start from this year.

The Police Headquarters has not started any activities until now although the home ministry directives gave importance to controlling six types of crimes, including money laundering.

Experts suggest engagement of experts in such investigation

Dr BM Mainul Hossain, associate professor at Dhaka University’s Institute of Information Technology, told TBS that to prevent illegal transactions using mediums like bitcoin, police should form a separate team comprising those skilled in such matters. 

Or, those conducting money laundering investigations need to be provided training and necessary equipment support, he said.

The police are now completing investigations just after identifying transaction wallets. There is no way to avoid liabilities on the excuse that they do not have necessary skills. 

They should continue investigations with the help of those who are experts in these matters, he noted.

No decision over cryptocurrency in five years

In 2017, the Bangladesh Bank in circular asked all to refrain from virtual currency trading. Such transactions would not be allowed as it might go against the Money Laundering Prevention Act and the Anti-Terrorism Act.

But in the meantime, there were talks among agencies concerned about not rejecting cryptocurrencies altogether. 

For example, in March 2020, the Information and Communication Technology Division prepared a national Blockchain technology strategy. 

In the strategy paper, the division said $23 billion had been invested in blockchain startups since 2013. This investment might increase further in future. 

“This is an opportunity for Bangladeshi software industries. But since the use of cryptocurrency is not allowed, the software industry of Bangladesh is missing out on it,” it said.

However, the strategy paper said in the absence of appropriate technology, legal and policy frameworks, such domains could open the way for terrorist activities in the country. Therefore, it is essential to ponder over how to deal with it.

Also, while investigating a case last year, the CID sought Bangladesh Bank’s opinion on cryptocurrencies. In response, the central bank said even if the ownership, storage or transactions of cryptocurrencies are not recognised, trading of it cannot be considered as a crime.

 Transactions in virtual currencies may result in second degree offenses under the Foreign Exchange Regulation Act 1947, the Money Laundering Prevention Act 2012 and the Anti-Terrorism Act, 2009.

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