Search and seizure powers for crypto assets and cryptoasset-related items.

Schedule 8 of the Economic Crime and Corporate Transparency Act 2023 introduces significant amendments to Part 2 of the Proceeds of Crime Act 2002 (POCA), enhancing the UK’s ability to tackle economic crime involving crypto assets.

Key Amendments to Part 2 of POCA:

Seizure Powers Without Arrest: Previously, law enforcement needed to arrest an individual before seizing assets. The amendments remove this requirement, allowing officers to seize property, including crypto assets, without a prior arrest.

Definition and Seizure of Crypto asset-Related Items:

The Act introduces “crypto asset-related items,” defined as property containing or providing access to information likely to assist in seizing crypto assets. This includes items like hardware wallets or devices storing recovery phrases. Officers can now seize such items to facilitate the recovery of crypto assets.

Transfer and Management of Seized Crypto assets:

Law enforcement can transfer seized crypto assets into wallets they control, ensuring secure management during investigations. This addresses the unique nature of digital assets, which differ from traditional tangible properties.

Enforcement Against Third-Party Service Providers:

The amendments empower magistrates’ courts to issue enforcement orders directed at third-party crypto asset service providers, similar to existing powers over bank accounts. This ensures that assets held with such providers can be effectively targeted during enforcement actions.

Destruction of Certain Crypto assets:

The Act permits the destruction of crypto assets if realising them is impractical or if their return to circulation would likely facilitate criminal conduct. This measure prevents assets from being used to fund further illegal activities.

These amendments modernise POCA, equipping law enforcement agencies with the necessary tools to address the challenges posed by the misuse of crypto assets in economic crimes.

Jeremy Barnett is an expert on Crypto Asset Law and Regulation. He is a joint author of Artificial Intelligence Law and Regulation (edited by Charles Kerrigan, EE publishing 2022, in particular bias, ethics and benchmarking: chapter 26 ‘Automation and Fairness’.