The United States Internal Revenue Service (IRS) is preparing to send four investigators to Australia, Colombia, Germany, and Singapore to take on financial and tax crimes related to decentralized finance (DeFi) products and cryptocurrencies. The four agents, who specialize in cyber and cryptocrime, will participate in the IRS’s pilot program from June to September 2023. According to Carissa Cutrell, an IRS spokesperson, the mission of the four agents is “to help combat the use of cryptocurrency, decentralized finance and mixing services in international financial and tax crimes.”
The IRS’s 120-day pilot program aims to determine the investigators’ “ability to work cooperatively” with foreign law enforcement bodies to identify and eliminate global financial and tax crimes. Chris Janczewski, a former special agent in the IRS-CI Cyber Crimes Unit, noted that the IRS’s growing presence abroad would simplify international investigations.
Previously, the IRS-CI Cyber Crimes Unit had brought to book the alleged criminal who ran the drug and hacking services marketplace Alphabay and had also played a role in the takedown of a marketplace for stolen social security numbers. Despite the unit’s expertise in tracking and taking down cybercriminals, the U.S. revenue collector has only stationed one investigator abroad, in The Hague, Netherlands. The four agents’ assignment during the pilot program is expected to lead to the deployment of more agents and better international cooperation in the fight against financial and tax-related crimes involving cryptocurrencies and DeFi products.
The sending of agents outside the United States for investigations is an efficient way to tackle the global nature of financial and tax crimes committed using cryptocurrencies and DeFi products. The agents’ deployment in foreign countries helps simplify investigations as they work closely with local law enforcement agencies, sharing expertise and resources to achieve the common objective of identifying and eliminating financial and tax crimes.
The global tax agencies are increasingly focused on cryptocurrencies because they enable anonymity and cross-border transactions without the need for central authorities to regulate monetary transactions. Global tax agencies such as the IRS, the Australian Tax Office (ATO), and others are partnering with tax technology companies to use various analytical tools to track financial transactions related to cryptocurrencies to uncover fraud or criminal activity.
While cryptocurrencies’ anonymity underpins their use in illicit activities, groundbreaking research has shown that blockchain analysis could help bring down tax evasion and other financial crimes. The IRS has invested millions of dollars in contracts with blockchain analytics companies to track and monitor cryptocurrency transactions. The use of blockchain analysis allows for the tracking of encrypted transactions, linking wallet addresses to user identities, and identifying suspicious transactions involving illicit activities or criminal activity.
Regulators and global tax agencies are increasingly scrutinizing cryptocurrencies as their popularity grows. Countries are setting up specialized units to oversee and monitor cryptocurrency activity, with the primary purpose of identifying criminal activities like hacking, money laundering, and tax evasion.
In conclusion, the IRS’s plan to send four investigators to tackle financial and tax crimes committed using cryptocurrencies and DeFi products in foreign countries is an important move towards achieving the common objective of global financial and tax crime elimination. This pilot program will ultimately lead to better international cooperation in eliminating crimes committed through digital assets.