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Cybersecurity

IRS Supports Disclosure of Crypto Exchange Information to Law Enforcement

Countering cybercrime

IRS Supports Disclosure of Crypto Exchange Information to Law Enforcement

The Internal Revenue Service, in response to questions by Sen. Maggie Hassan, said sharing information with law enforcement agencies about the beneficial ownership of companies trading cryptocurrencies and related entities is one of several ways it can help combat cybercrime. The tax agency said that such inter-agency collaborations can prove especially effective against cyber attackers that use decentralized ledger technology to mask their movements, Nextgov reported Monday.

In a letter to the New Hampshire lawmaker, the IRS lamented that despite Congress calling for relevant federal agencies to contribute to a database on who ultimately owns and profits from a company, it is not permitted to do so due to confidentiality provisions of the Internal Revenue Code. The IRS told Hassan that its inability to share the information it collects with the Financial Crimes Enforcement Network and other law enforcement agencies, significantly “degrades the utility of the information they do collect.”

An IRS spokesperson clarified that the letter to the Senator was not connected to any effort to lobby for new legislation. Instead, it was a letter responding to concerns raised by Hassan to the tax bureau.

Building a beneficial ownership database, a project led by FinCEN, is a bipartisan effort aimed at countering money laundering and various other purposes for which criminals use shell companies. The IRS is empowered to levy penalties on companies engaged in the use of both crypto and fiat currencies for questionable purposes. The bureau said in its letter to the Senator that enhancing civil and criminal penalties for egregious behavior in the cryptocurrency sector is likely to encourage voluntary compliance.

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Category: Cybersecurity

Tags: cryptocurrencies cyber attacks cybersecurity Internal Revenue Service Maggie Hassan Nextgov

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