HMRC seeks tech to unearth cryptocurrency cybercriminals

Written by Sam Trendall on 20 January 2020 in News
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Tax agency looks to invest in cryptoanalysis tool

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HM Revenue and Customs is looking to invest in “cryptoanalysis” technology that could help it identify and investigate criminals trading in Bitcoin and other virtual currencies.

The tax agency is looking for a tool that could allow its FIS-DSI Cybercrime team to analyse blockchain-based cryptocurrency transactions. According to the department’s request for proposal document, the likes of Bitcoin and Ethereum are increasingly used for legitimate payments – but also for “tax evasion and money-laundering”.

“Many of these crypto-asset transactions are recorded publicly in a ledger known as a blockchain,” HMRC said. “Whilst the transactions are typically public, the participants undertaking them are not.”

While free online tools and human analysis of “raw blockchain data” can shed some light on these transactions, the department believes that investing in a commercial product would allow its investigators to close “intelligence gaps” in how the trade in cryptocurrencies is currently “supporting criminal activity against HMRC”.


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The tax authority is seeking the “provision of a tool that will support intelligence-gathering methods to identify and cluster crypto-asset transactions into linked transactions and identify those linked to crypto-asset service providers”.

The product in question must use “cluster analysis” to attribute transactions to companies or service providers – especially those known to run gambling services, dark-web operations, or so-called cryptocurrency “mixing” scams.

HMRC requires a tool that can, at a minimum, track transactions and value fluctuations in the following currencies: Ethereum and Ethereum Classic; Bitcoin and Bitcoin Cash; Ripple; Tether; and Litecoin. The department would, ideally, also like a product that could develop the ability to track Monero, Zcash, and Dash.

A budget of £100,000 is available to spend on a year’s worth of licensing for the chosen tool. Proposals from potential suppliers are invited until 31 January, ahead of a scheduled contract start date of 17 February.

“The successful service provider must have relevant people, suitable assets, and deep experience,” HMRC said. “Critically, we will be looking for vendors to showcase their capabilities by demonstrating their expertise in the field of crypto-asset tracing.”

 

About the author

Sam Trendall is editor of PublicTechnology

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