Is blockchain good news or bad when it comes to policing and crime? Part 2

Blog post

Is blockchain good news or bad when it comes to policing and crime? Part 2

Guest blog by Ian Kearns, Senior Associate Fellow, The Police Foundation

In my previous piece, I described the kind of challenge that blockchain and crypto-currency platforms are presenting to the police. The news however, is not all bad. Blockchain has its upsides and it is important to keep a sense of balance with regard to what this technology means.

First, with regard to the ability of the police to investigate crimes that are aimed at or facilitated by crypto-currencies, there is some reason for optimism. Anonymous or not, the fact that at some point criminals have to transfer real money into crypto-currency and cryptocurrency back into real money means that with the right transaction monitoring software, law enforcement authorities can look to deanonymize the financial behaviour of bad actors. By focusing on the on and off blockchain transactions that are visible and by tracking where money goes when it comes off of a cryptocurrency exchange they can potentially spot anomalous and suspicious financial flows and use that information to help target wider investigations into possible perpetrators.

Law enforcement authorities have had some successes. Europol, for example, busted a drugs payment operation where crypto-currencies were being used to transfer money from Europe to Colombia. As the Economist reported:

“European henchmen visited crypto-exchanges to convert euros into anonymous virtual currencies. These were sent to a digital wallet registered in Colombia and swapped into pesos on an online exchange. The pesos were withdrawn in cash, which local ‘money mules’ spread over dozens of bank accounts, in sums small enough to avoid suspicion.”

The criminals tactics were sophisticated, but they were still caught.

Elsewhere, on 28 August 2015, Ali Shukri Amin, a resident of Virginia in the US, was sentenced to eleven years in prison for conspiring to provide material support and resources to ISIL, via crypto-currency use. He not only understood the way crypto-currency could be used for this purpose himself, but made the mistake of using social media to explain to others how it could be done, allowing the police to catch him.

Beyond effective crime detection still being possible, there is intense focus on the potential for blockchain technologies to increase transparency, accountability, and therefore trust with regard to the storage, safeguarding and sharing of evidence and intelligence related to ongoing investigations and criminal cases. In Australia, AUSTRAC, the financial intelligence agency and the Australian Criminal Intelligence Commission have recently awarded a $1 million contract to Singapore based consultancy HoustonKemp to build a blockchain based system to record intelligence and data garnered by the police. China’s Ministry of Public Security, which is formally in charge of all Chinese police forces, has built its own blockchain application to securely place evidence from investigations into cloud storage. Patented in November 2017, the system timestamps and stores data submitted to the cloud after receiving multiple signature confirmation from both police and cloud service provider, in an attempt to make deposition procedures more transparent and tamper proof. Once entered into the blockchain, the system is intended to provide an immutable copy of the data and information on who entered the data and the time and date it occurred.

A blog post by Al Davidson, Technical Architect at the Ministry of Justice in London, in November 2017 acknowledged and commented on the potential of this kind of development, especially in relation to trust. “There is”, he said, “no need for everyone to just trust a single authority. Trust is distributed and decentralised among the users.”

In India, another blockchain project called ‘Police 2020’ is developing the technology for similar security reasons but is extending it to achieve more transparent and efficient access to data for a variety of stakeholders. The problem of effective data-sharing between organisations is a big and recognised one in all jurisdictions. Often officers and officials are unsure of what information about a case can and should be shared with whom, and they end up withholding it out of fear they will make a mistake.

The combination of blockchain technology with smart contracts that lock in varying levels of permissions can address this and effectively automate the decision. This could bring enormous advantages in terms of both trust and efficiency. As my colleague, Rick Muir, the Director of the Police Foundation has noted: “In 2010, Her Majesty’s Inspectorate of Constabulary (HMIC) found that during the prosecution of a standard domestic burglary there were 70 ‘rubbing points’ where the progress of a case was dependent upon one justice agency securing information from another. In addition, as part of this process there were at least seven occasions where data needed to be transferred between agencies. This level of complexity presents multiple moments for mistakes to be made and for duplication to occur. Blockchain technology could enable automatic updates and design in rules to prevent error.”

In the Indian case, it is envisaged that victims and complainants will be able to receive controlled access to the system and automatic updates every time there is a development in their case. Through different permission levels and access protocols, information will be more easily shared between institutions, agencies and individuals related to a case, and between the police and prosecutors and defence lawyers, while keeping the information secure and tamper free for everyone. It is easy to see how such a system might have helped in recent controversial, and damaging, cases related to evidence disclosure and rape cases here in the UK.

The immutable nature of transactions in blockchain systems should also present crime prevention opportunities. Blockchain technology is already being used to combat the problem of blood or conflict diamonds. Such diamonds usually appear on the market as a result of rebel groups or even government backed troops in conflict zones seizing control of mines and engaging in the diamond trade to fund their local operations and lifestyles. At the other end of the chain, purchasers of diamonds cannot be sure they are getting what they think they are paying for as a result. In early 2017, in a demonstration of how blockchain might be able to help counter fraud and unethical sourcing in the diamond market, De Beers, a major player in the world diamond market, announced that it would create the first blockchain ledger for tracing stones from mine to individual consumer, covering every step in between.

Other blockchain start-ups, such as Everledger, have also entered the market. Everledger uses over 40 features of a diamond, including colour and clarity, to create a diamond’s unique digital ID. Once information is logged in the blockchain, it is both immutable and checkable by those processing a diamond, to make sure they are dealing with the same stone that is logged into the system. It is now possible to track a diamond that might have been mined in Colombia, cut and polished in India, shipped to wholesalers in Switzerland, and then passed to retailers in the UK and elsewhere.

The same technology is being applied to combat the counterfeiting of fine wines. Again, in the latter case, a unique digital ID for a bottle of wine is created using information about the bottle, the label and the cork, enabling its movements to be tracked, but also checked by everyone processing or potentially buying it. Elsewhere, the online art world, which has been subject to increasing fraud, is also being transformed by companies like Verisart, who digitally register and authenticate artworks, track their movements, and both demonstrate their provenance and protect the rights of the original artist. This should help to prevent cases like that of the three individuals prosecuted in New York in 2017 for counterfeiting Damien Hirst prints and selling them online for $400,000.

It is likely that many more use cases will be developed for blockchain technology in the crime prevention space. It is all the more important that these are used, along with other possible benefits of blockchain as described above, in the fight against crime because we know criminals are actively exploiting its opportunities for their own purposes. It may not be possible to stop them entirely, but it should be possible to balance the scales somewhat by law enforcement authorities and others taking advantage of the technology to prevent crime, improve processes, and adapt crime detection approaches wherever possible.

Dr Ian Kearns is the lead for the Police Foundation’s project on data-driven policing.

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