TLDR
- City of London Police has partnered with Gowling WLG law firm to help fraud victims recover assets when prosecution isn’t viable
- The partnership follows a successful pilot where they recovered over £2 million in crypto assets for an elderly Alzheimer’s patient
- UK lost £570 million to fraud in the first half of 2024 alone; globally digital asset scams received $9.9 billion in 2024
- Recent legal changes in the UK, including amendments to the Proceeds of Crime Act, have enhanced authorities’ ability to recover digital assets
- Digital asset recovery is becoming more common with specialist services emerging to trace and recover stolen crypto
The City of London Police has launched a new civil asset recovery program in partnership with international law firm Gowling WLG to help victims of fraud recover their stolen funds. The initiative focuses on cases where criminal prosecution may not be possible or viable, such as those involving anonymous cryptocurrency criminals.
The partnership follows a successful pilot project where the team recovered more than £2 million in cryptocurrency that had been stolen from an elderly woman suffering from Alzheimer’s disease. This case demonstrated the potential effectiveness of collaborative approaches between law enforcement and private legal experts.
“After a successful pilot, we are pleased to be working on this initiative with City of London Police to investigate and support victims to recoup monies lost to such frauds,” said Bríd Holden, Director at Gowling WLG.
Rising Fraud Concerns
The timing of this partnership is crucial as fraud continues to grow as a major problem in the UK and globally. According to Holden, the UK lost £570 million to fraud in just the first half of 2024.
The global picture is even more alarming. Blockchain analysis firm Chainalysis reports that digital asset scams received at least $9.9 billion worldwide in 2024 alone.
Many victims of these scams previously had little hope of recovering their funds. The anonymous nature of many cryptocurrency transactions has historically made it difficult to trace and recover stolen assets.
Detective Chief Inspector Craig Mullish of the City of London Police explained the impact on victims: “As a victim of fraud, you can feel helpless and that you have to shoulder the often heavy financial burden of losing money at the hands of criminals.”
He added that the partnership with Gowling WLG aims to
“provide a clear process for victims in helping them take back what is owed to them.”
Legal Framework Improvements
Recent changes to UK law have created a more favorable environment for asset recovery. In March, UK police and specialist lawyers recovered over £520,000 in digital assets defrauded from an 80-year-old man.
This recovery was the first of its kind utilizing the recently amended Proceeds of Crime Act 2002 (POCA). The amendments allow courts to issue restraining orders that authorities can use to retrieve digital assets directly from exchanges and custodian wallet providers.
The groundwork for these recoveries was laid in April 2024 when the Economic Crime and Corporate Transparency Act 2023 came into force. This legislation expanded law enforcement powers regarding digital asset-related criminal activity.
The Act extended the confiscation and civil recovery regime under POCA to include digital assets. It gave law enforcement agencies authority to seize, store, and potentially sell or destroy digital assets as part of investigations.
Exchanges and custodian services are now also required to cooperate with law enforcement agencies. This includes providing access to relevant transaction information.
Further improvements may come with the Property (Digital Assets etc) Bill, currently under review in the UK Parliament’s House of Lords. This legislation would create a new category of personal property for digital assets and NFTs, officially recognizing them as property under UK law.
The Growing Field of Asset Recovery
Digital asset recovery, once considered nearly impossible, is becoming increasingly common. Some experts now argue that recovering digital assets can be easier than recovering physical assets due to blockchain technology’s immutability and traceability.
Numerous specialized services have emerged to assist victims. For example, Token Recovery launched an end-to-end digital asset recovery service last June. According to the company, it “retrieves digital assets from all networks,” making its services “chain agnostic.”
These specialized services combine expertise in blockchain investigations with legal knowledge and analysis of blockchain protocols. Their goal is to trace, freeze, and ultimately recover lost and stolen assets.
