The United States Postal Inspection Service (USPIS), the law enforcement arm of the United States Postal Service, has conducted a audit from the way you conduct cryptocurrency-related research and found that there is significant room for improvement.
Notably, the USPIS handled only a small number of crypto-related cases during the two fiscal years under review, 2019 and 2020, with a total of four closed cases for which postal inspectors seized crypto as evidence during an investigation and another nine. cases that were managed under the USPIS “Cryptocurrency Funds Program”, established in 2017.
This program was intended to specify standards and policies that can help account for cryptocurrency transactions during investigations and reduce associated operational risks. As the report has emphasized, this is particularly important given that “the anonymity of cryptocurrency transactions and significant fluctuations in the value of cryptocurrencies create opportunities for abuse or theft when used during law enforcement activities.”
Despite the small volume of crypto-related activities, the USPS Office of Inspector General (OIG) had determined Earlier this year, a self-initiated audit was necessary in light of the fact that cryptocurrencies can often be the “preferred medium of exchange” for illicit activities such as ransomware campaigns, online scams, and money laundering.
In evaluating operations during the two fiscal years under review, the audit report identified a “lack of standardized training” for USPIS employees regarding cryptocurrencies. This meant that postal inspectors who conducted undercover investigations and purchased cryptocurrencies as part of their activities did not adhere to the guidance that had been established as part of the Cryptocurrency Fund Program.
While in some cases the inspectors used the program to account for the crypto transactions they conduct for research purposes, the audit found that there are many legitimate instances where use of the program may not be possible, such as when certain crypto providers only accept payments in the form of specific private cryptocurrencies.
In these cases, the inspectors were required to request standard research funds in the form of US dollars and were personally responsible for all crypto-fiat conversions and the management of unused research funds.
It is in these scenarios where the audit identified a failure in communication between management and inspectors, which means that program managers are currently “unable to account for the total amount of cryptocurrencies used for investigation purposes in the Inspection Service. Postcard”.
Therefore, the auditors were asked to perform a manual keyword search for various crypto-related terms to try to determine whether or not crypto had been used in certain investigation cases, finding 1,064 unique case numbers that will now need to be checked manually. On this point, the audit report concluded:
“The Program cannot accomplish one of its primary purposes: to help postal inspectors manage the challenges associated with the inherent volatility of cryptocurrency, ultimately leaving the Postal Inspection Service susceptible to theft, abuse, and mismanagement of federal funds. “
The audit report recommended that going forward, the USPIS should ensure that the Cryptocurrency Fund Program has the information it needs to provide oversight and that the agency also develop a comprehensive cryptocurrency training program for all inspectors. In addition, it has recommended a current data management review for investigative transactions, which have been inaccurate and include duplicates, again affecting the agency’s ability to accurately track and manage its law enforcement activities related to cryptography.
Related: Darknet, cryptocurrency, and two intersecting health crises
According For Margaret McDavid, Deputy Assistant Inspector General of the Information Technology and Inspection Services Directorate of the OIG Office of Audit, the USPIS was “involved in joint efforts to dismantle the Wall Street Dark Web Marketplace” in 2019, leading to the seizure of more than $ 25 million in crypto.