Money Laundering and Cryptocurrency

Cryptocurrency is treated the same as cash or any other property under UK money laundering law, and using crypto to move, hide or convert criminal funds can lead to a money laundering charge, even where no traditional bank account was involved.

This guide explains how UK law applies to crypto, how investigators trace it, and what to do if you are contacted about a crypto-related investigation.

Had crypto seized or your wallet flagged by investigators? Call Moeen & Co. Solicitors now on 0203 959 7755 for confidential advice.

Table of Contents

What is cryptocurrency money laundering?

Cryptocurrency money laundering generally refers to dealing with crypto assets that represent, or are suspected of representing, the proceeds of crime. Crypto assets may be used to transfer or store value, but their use does not automatically make a transaction criminal.

The main money laundering offences are set out in sections 327 to 329 of the Proceeds of Crime Act 2002 (POCA). They cover concealing, disguising, converting or transferring criminal property; becoming involved in certain arrangements involving criminal property; and acquiring, using or possessing criminal property. The Crown Prosecution Service's money laundering guidance explains how these offences are approached.

Is owning cryptocurrency a crime in the UK?

No. Owning or using cryptocurrency is not, by itself, a money laundering offence. A criminal allegation depends on the property involved, the conduct alleged and the evidence.

Can you be investigated for money laundering involving cryptocurrency?

Yes. Cryptocurrency is not illegal in itself, but using crypto assets to handle or transfer property suspected to come from crime may lead to a money laundering investigation. The prosecution must prove the elements of the specific offence, including the required knowledge or suspicion.

How can cryptocurrency feature in a money laundering investigation?

Investigators may examine whether crypto assets were connected to criminal proceeds, how they moved between wallets or exchanges, and who controlled the relevant accounts or devices. Depending on the case, they may look at:

• Transaction histories and wallet addresses
• Records held by crypto asset exchanges or other service providers
• Bank transfers used to buy or sell crypto assets
• Messages, emails and other communications
• Devices, account access and evidence about who controlled a wallet
• Records explaining the source and purpose of the funds

A transaction history is only part of the evidence. Investigators may also need to establish who was involved, what they knew or suspected, and whether the assets were criminal property.

Can someone be charged if they did not know the cryptocurrency was criminal?

The answer depends on the offence and evidence. For the principal POCA offences, the prosecution generally has to prove the required knowledge or suspicion in relation to criminal property. Being named on an exchange account or having access to a wallet does not automatically prove who controlled it or what they knew.

A solicitor can assess the transactions, communications and other evidence, and advise whether there is a lawful explanation or a dispute about control, involvement, knowledge or suspicion.

Can the police freeze or seize cryptocurrency?

Yes, in some circumstances. A crypto asset exchange may restrict an account under its terms or in response to legal requirements. Law enforcement also has powers under POCA to seize, detain, freeze and seek forfeiture of crypto assets and crypto asset-related items. The Economic Crime and Corporate Transparency Act 2023 introduced crypto asset-specific recovery powers.

The process depends on how the crypto assets are held and the legal power being used. A restriction imposed by an exchange is not necessarily the same as a court order. If you receive a notice or order, check what it covers and get legal advice quickly, as deadlines may apply.

Do not transfer, conceal or dispose of assets that may be subject to an order. Keep relevant exchange records, transaction histories and communications, and speak to a solicitor before responding to investigators.

What evidence may be used in a cryptocurrency money laundering case?

Evidence may include blockchain transaction data, exchange records, bank statements, device information, messages, witness accounts and expert analysis. The prosecution may rely on direct and circumstantial evidence.

The defence may need to examine the reliability and meaning of that evidence. For example, a wallet address or transaction record may not, by itself, establish who controlled the assets or what a person knew about their source.

What are possible defences to a crypto money laundering allegation?

There is no single defence that fits every case. Depending on the allegation, a solicitor may consider whether:

• The prosecution can prove the assets were criminal property
• The evidence establishes the required knowledge or suspicion
• The accused controlled or operated the wallet or exchange account
• The transactions have a lawful source or explanation
• The financial or blockchain analysis is reliable
• The investigation or evidence raises legal or procedural issues

The available arguments depend on the charge, evidence and circumstances. No solicitor can guarantee that a case will be dropped or that a particular outcome will follow.

What is the penalty for cryptocurrency money laundering?

The fact that a case involves cryptocurrency does not, by itself, create a separate money laundering penalty. The sentence depends on the offence and circumstances. The principal POCA offences can carry up to 14 years' imprisonment, a fine, or both on conviction on indictment.

In England and Wales, judges use the Sentencing Council's money laundering guideline when deciding a sentence. Confiscation proceedings may also follow a conviction.

Can an exchange freeze my cryptocurrency account?

An exchange may restrict an account under its terms or in response to a legal requirement or order. Ask the provider for information about the restriction, but get legal advice if police or enforcement authorities are involved.

Can police seize a crypto wallet?

Law enforcement may have powers to seize crypto asset-related items and seek access to or recovery of crypto assets under POCA. The legal basis and procedure depend on the circumstances.

Can cryptocurrency be confiscated after conviction?

Yes. A court may make confiscation orders under POCA following conviction, subject to the applicable legal process. The amount and assets involved depend on the case.

What should I do if I am under investigation?

• Ask for legal advice before answering police questions.
• Keep transaction records, exchange statements, messages and relevant devices.
• Do not delete, alter, move or conceal material or assets connected with the investigation.
• Read any court notice or order carefully and note the deadlines.
• Avoid discussing the case with other people who may be involved until you have taken legal advice.

A solicitor can explain the allegation, advise you before an interview and help you understand any asset restrictions.

How can a solicitor help with a crypto money laundering case?

A money laundering defence solicitor can review the allegation and advise on the evidence, your interview and possible next steps. Depending on the circumstances, they may:

• Examine financial, exchange and blockchain records
• Assess evidence about wallet access and control
• Review the alleged source and movement of the crypto assets
• Advise on the required knowledge or suspicion for the charge
• Respond to seizure, freezing or forfeiture proceedings
• Represent you during police interviews and court proceedings

Speak to a solicitor about a crypto-related money laundering matter

If you are under investigation or your crypto assets have been frozen or seized, call 0203 959 7755 for urgent legal advice and representation.