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Asset Forfeiture in cryptoassets

The general use of cryptocurrencies in the future is imminent, which implies the need to implement rigorous control measures to prevent them from being used as a mechanism for illicit operations. In fact, the International Criminal Police Organization has warned about the risks of the rise of technologies that ensure user anonymity. It has said that cryptocurrencies and the dark web present their advantages, because of the anonymity that characterizes them. 

Likewise, they transform crime, since the money resulting from illicit activities can be converted into this type of currencies and used for illicit activities. However, Colombia has a tool for the protection of assets involved in illicit activities, which is the asset forfeiture (extinción de dominio).

In Mexico, there have been law initiatives requesting that the possibility of prosecuting cryptocurrencies be included in the asset forfeiture, however, there is little knowledge on the subject. Therefore, it is required to implement technologies that allow these actions to take place, in addition to training and knowledge development in this specific matter.

Let us remember that the extinction of the ownership right can be defined as "a patrimonial consequence of illicit activities or those that seriously deteriorate social morality”. In this sense, to fulfill this purpose, the academic community and the practicing professionals have raised the need for Congress to propose rules that adapt to criminal trends. This implies creating ways to prosecute new assets, such as cryptocurrencies, which even today are legal currencies in countries such as El Salvador.

Of course, criticism has arisen in this regard due to the lack of existing legislation and regulation, to such an extent that opposition sectors have accused the government of El Salvador of giving a free way to criminal organizations to carry out financial movements resulting from their illegal actions, safeguarded by the acceptance of bitcoin.

Thus, current concerns about this issue are being discussed in other countries. In this sense, the jurisdictions that are pioneers in the field will ask themselves about suitable control mechanisms to curb the new criminal phenomena. Therefore, users of crypto-assets must be careful when trading them in order to avoid possible risks of asset forfeiture, which is emerging as the ideal protection mechanism.

Authors

Portrait ofSantiago Calle
Santiago Calle
Senior Associate
Bogotá
Juan Pablo Coy