Sally Clark

As part of the law enforcement response, cryptocurrencies and other cryptoassets have now been specifically targeted in the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The new powers, introduced in England earlier this year but still to come into force in Scotland, include specific provisions to more effectively support the recovery of cryptoassets under the Proceeds of Crime Act 2002 (POCA).

Setting aside the differing timeline for the introduction of the ECCTA north of the border, last month saw the targeting of cryptoassets using existing confiscation powers in what is understood to be a legal first in Scotland.

This case related to a robbery in March 2020 in which 23.5 Bitcoin, along with a car and other valuable items were stolen. The victim was confronted by three men wielding machetes and threatening physical violence who entered his house and forced him to transfer his Bitcoin into another account linked to John-Ross Rennie.

While denying he was physically present at the robbery, 29-year-old Rennie was indicted for his key role in this offence. He was found guilty of ‘reset’ as prosecutors convinced the court he had knowingly taken possession of the stolen cryptocurrency.

At the High Court in Edinburgh, Lord Scott sentenced Rennie to a six-month community payback order and ordered him to serve 150 hours of community service. While accepting he did not participate in the robbery, Lord Scott ruled that Rennie’s role was “pivotal” and without his knowledge, it was hard to see how the offence could have proceeded as it did.

Under the POCA, where an offender has benefited from particular criminal conduct, the court can be and in this case was requested by the Crown to determine the recoverable amount involved. At the time of this offence, the Bitcoin transferred into Rennie’s account was valued at just under £110,000 and he was presented with a confiscation order for the full amount.

The recoverable amount for the confiscation order was determined by assessing the benefit to the perpetrator from the offence in question. Regardless of the fact that Rennie no longer held the cryptocurrency, the court’s calculation took into account the property or pecuniary advantage he had obtained as a result of his involvement in this crime, being the value of the Bitcoin at the time it was transferred to his account.

This High Court case demonstrates the power of the Scottish courts in recovering cryptocurrency and other cryptoassets under the existing POCA powers. When the ECCTA comes into force here, courts will have enhanced powers when it comes to cryptoassets acquired through criminal activities.

Courts are currently empowered to require banks to hand over a sum of money held by an accused person through a confiscation order. In future, they will have parallel powers when it comes to cryptoasset service providers such as crypto exchange or wallet providers to require them to realise any seized cryptoassets and pay their resulting sum to the courts to satisfy a confiscation order.

These new powers will significantly assist law enforcement authorities by widening the circumstances in which their seizure powers can be used for cryptocurrency and other similar assets. This will help ensure cryptoassets can be seized more quickly by courts before they are dissipated by those who have acquired them through illegal activities.

Sally Clark is an of counsel at CMS. This article first appeared in The Scotsman.