UK Introduces New Legislation Granting Enhanced Powers to Seize, Freeze, and Destroy Cryptocurrencies for Illicit Activities

The United Kingdom (UK) has taken a bold step in the fight against organized crime, drug trafficking, fraud, and terrorism by introducing new legislation that grants enhanced powers to the National Crime Agency (NCA) and police to seize, freeze, and destroy cryptocurrencies used for illicit activities.

The new legislation, which came into force today, aims to bolster the ability of UK law enforcement to effectively investigate, seize, and recover cryptocurrencies linked to criminal activities. According to the press release, the NCA estimates that illicit crypto transactions linked to the UK reached at least £1.2 billion in 2021, with the actual figure likely being significantly higher.

Key points of the new legislation include the elimination of the requirement for police to make an arrest before seizing crypto from a suspect, the ability for law enforcement to seize materials that could be useful in probes, and the authority to transfer illegal cryptocurrencies into a law enforcement-controlled electronic wallet. Additionally, UK law enforcement will have the power to destroy a crypto asset if returning it to circulation is deemed not conducive to the public good.

Home Secretary James Cleverly emphasized the importance of these reforms in preventing criminals from benefiting from their illegal activities, stating, “Criminals should never be able to benefit from breaking the law, which is why we are making it much easier for law enforcement to stay on top of a new and developing threat.”

The introduction of these new powers follows a series of successful investigations by UK law enforcement agencies involving the seizure of cryptocurrencies. In January 2024, the NCA collaborated with the United States Drug Enforcement Administration to investigate a multi-million-dollar drug enterprise, resulting in the seizure of $150 million in cash and crypto. Additionally, HMRC seized three non-fungible tokens (NFTs) as part of a VAT fraud investigation, leading to the detention of three individuals suspected of trying to defraud the agency of £1.4 million.

These new measures signal the UK’s commitment to cracking down on illicit activities involving cryptocurrencies and ensuring that criminals do not benefit from their illegal actions. With enhanced powers granted to law enforcement, the UK is taking a proactive stance in combating financial crime in the digital age.