The RCMP is training more officers to tackle investigations involving cryptocurrency, as crimes tied to digital currencies continue to skyrocket.
Cryptocurrencies provide the medium to move value anywhere in the world in minutes," says Insp. Adrienne Vickery, the RCMP's officer in charge of the Cryptocurrency Program with the Federal Policing Criminal Operations – Financial Crime Section. "
When it's done for illicit purposes, we have to employ all of our investigative techniques to find the source of the funds and prove the criminal offence."
Legitimate and criminal uses
Thousands of cryptocurrencies are exchanged daily for legitimate goods and services and investment opportunities. They're also used to fund a wide range of illicit activities, including drugs, defrauding the vulnerable through schemes like romance scams, human trafficking, the sale of illegal weapons, and terrorist activities.
Cryptocurrency has become a go-to source to launder millions in criminal cash, because it can be exchanged into legal tender paper money such as Canadian or U.S. dollars. A total of $75 million was linked to cryptocurrency-enabled frauds in Canada in 2021, up from $22.8 million in 2020 and $8.2 million in 2019.
In April, the RCMP assembled a group of cryptocurrency specialists including police, lawyers and private-industry experts to strengthen information-sharing and teach a course to police officers from across Canada on how to conduct cryptocurrency investigations.
RCMP S/Sgt. Jason Kerr was one of 24 officers who attended.
His first exposure to cryptocurrency came in 2020 during a human trafficking investigation. He says he was caught off guard when he realized the suspects were using digital currency.
They were brutes and used intimidation," says Kerr, who is the non-commissioned officer in charge of Federal Serious and Organized Crime in Saskatoon, Sask. "
I was shocked to learn they had the skills to use crypto and make those transactions."
Since then, he's dedicated himself to learning more about digital currencies. Kerr says the course helped give participants not only the skills but the confidence to take on cases involving cryptocurrency.
Trends and tracing the flow
During the course, officers learned about current trends in the illicit use of cryptocurrency, tracing the flow of digital currency, as well as related case studies, legal concerns and seizures.
There were presentations from the Public Prosecution Service of Canada, Ministry of the Attorney General Office of Ontario, the Financial Transactions and Reports Analysis Centre of Canada, the cryptocurrency exchange Binance, and blockchain research company Chainalysis.
The officers were shown how, with the right training and information, police can follow the movement of any cryptocurrency by using a blockchain, a secure system that records transactions, often on a publicly accessible database.
Cryptocurrency has been here for some time but for many it's still new and misunderstood," says Vickery. "
But on many blockchains, we can see dates and balances and the details of each transaction."
What remains hidden and left for police investigators to find out is who is controlling the cryptocurrency. No one's using their names on a blockchain. Instead, users create a code that serves as their digital signature.
Nevertheless, the RCMP has had successful criminal investigations involving cryptocurrency. A Gatineau, Que., man pleaded guilty this year after a joint FBI-RCMP ransomware investigation led to the seizure of tens of millions of dollars' worth of cryptocurrency.
Officers at the RCMP training session heard about a 2018 case known as Project Obutton, in which a vendor named Mr. Hotsauce was selling drugs in exchange for Bitcoin, the most popular cryptocurrency available.
During a search of his home, RCMP officers found a running computer and a piece of paper with a jumble of numbers and letters written on it.
The officers quickly called Vickery and other officers for help. Their swift action led to a successful seizure and prosecution of more than $200,000 in cryptocurrency – the RCMP's first such seizure.
You don't have to be an expert in cryptocurrency to investigate crimes where it's used," says Vickery. "
But, we want officers to have as much information as possible so these investigations can be successful."
Vickery became the cryptocurrency co-ordinator in 2016, and has been building the RCMP's capacity to deal with crimes associated with digital currency since then.
Sharing crypto knowledge
Some officers who attended the cryptocurrency course will serve as mentors to their provincial colleagues.
S/Sgt. Kerr in Saskatchewan has already been supporting several colleagues and encourages them to write their own judicial warrants.
Search warrants and production orders are all designed with places, like banks, or documents in mind," says Kerr. "
Crypto doesn't work that way. It doesn't have those things. It's virtual and we have to keep that in mind."
Federal Policing Criminal Operations Branch plans to offer several cryptocurrency courses each year.
The RCMP's policy on cryptocurrency has been in place for two years. A tool kit, which is intended for police investigators, is now available to provide answers to officers' basic questions.
Looking for more?
You might be interested in our Q&A with a cryptocurrency expert.