Legal issues
The money laundering offences
- Section 327: concealing, disguising, converting, transferring or removing criminal property.
- Section 328: entering into or becoming concerned in an arrangement that facilitates someone else's acquisition, retention, use or control of criminal property.
- Section 329: acquiring, using or possessing criminal property. There is a defence where adequate consideration was given, for example a genuine sale at a fair price, though it does not apply where the value given is significantly less than the value received.
Suspicion is a low threshold: more than a vague feeling, but less than belief. Swapping, bridging or moving funds after you suspect their origin can itself be the offence.
Authorised disclosures
A person who suspects property is criminal can make an authorised disclosure to the National Crime Agency and seek consent (a defence against money laundering) before dealing with it. Regulated crypto businesses also have reporting duties.
Sanctions
UK financial sanctions apply to cryptoassets in the same way as other assets. Dealing with funds owned or controlled by a designated person, including entities designated under the UK's North Korea regime, can be a criminal offence where the person knew or had reasonable cause to suspect the connection, and can attract civil penalties.
Evidence that matters
Evidence that matters most
- The trade record: platform, counterparty profile, chat logs, price and payment proof.
- Whether the price was in line with the market at the time.
- Your usual pattern of trading, to show the transaction was ordinary for you.
- Identity and source-of-funds checks you made on the counterparty.
- What you did after any warning, flag or freeze.
Reasonable lines of enquiry
Questions to test the allegation
- How many hops separate your wallet from the hack, and how was each attributed?
- Did the funds pass through a large exchange or service where many users' funds mix?
- Was anything public, at the time you dealt, that would have put you on notice?
- Who else in the chain has been identified, and what did they say?
What happens next
An exchange may restrict your account and ask questions about a deposit. Police may seek a crypto wallet or account freezing order, then forfeiture. A criminal investigation may follow, with a voluntary interview or arrest and seizure of devices. The civil and criminal strands can run together. See crypto wallet freezing orders and money laundering pre-charge investigations.
Immediate steps
- Stop dealing with the specific funds once you have any suspicion, and take advice on whether to make an authorised disclosure.
- Do not try to "clean" the funds by swapping, bridging or mixing them.
- Preserve every chat, screenshot and record of the trade.
- Answer an exchange's questions accurately and only after advice if there is any doubt.
- Do not attend a police interview without a solicitor.
What should you send us?
Send the trade details, the counterparty information you hold, any exchange or police correspondence and the dates.