‘Victims’ of government intervention to curb crime

Special criminal law is often based on socio-economic ideas, aimed at improving society by achieving social, ecological or economic objectives, or at countering harmful conduct in certain sectors of the economy.[1] As a rule, these good intentions are driven by political convictions and sometimes, depending on the subject matter, are also substantiated by scientific insights.

Government intervention and steering regulation do not, of course, always have the desired effect. One sometimes hears businesses and citizens say that they are ‘victims’ of government policy.There may or may not be good grounds for this. It is a fact, however, that government intervention will have to be evaluated for its effectiveness and for whether the intended benefits of the policy outweigh the costs for businesses and citizens.

In addition, it might be a good idea for governments to frame the weak spots or future challenges of new regulation more clearly and to make them more transparent, not only in order to keep the limitations of regulation constantly in view internally, but also to prevent those subject to the law from, where applicable, coming to see themselves more as ‘victims’ of government policy than as part of a broader societal approach to solving the problem.

This should be the case in particular where(i) the efforts and costs for businesses and citizens are high; (ii) the effects are not immediately visible or measurable; and (iii) the proposed solution contains one or more leaks, as a result of which its purpose could be called into question.

In the context of money laundering, crypto and transparency of transactions, comments occasionally surface about the effectiveness of regulation, or at least questions can be raised about the policy. These relate, among other things, to leaving mined data unused, the back door abroad, and the focus on regulating central systems.

Unused mined data

A solution for combating money laundering and terrorist financing by means of crypto-assets is usually sought in the transparency of transfers. The terms ‘money laundering’, ‘crypto’ and ‘transparency’ are not clearly defined and have in recent years regularly been used as buzzwords to draw attention to one or more themes. When these three terms are taken together, the result is a rather marshy area in which it is analytically difficult to manoeuvre.

At its core, money laundering is about safely parking capital (goods) earned through, for example, drug trafficking, human trafficking or cybercrime, or at least about removing the illegal taint from it or – if you are a really good launderer – giving it a pseudo-legal veneer:

• That parking can take place in a payment account, in gold, in crypto, in real estate abroad or in a suitcase buried in the ground. And there are many other creative places one could think of.
• Removing the illegal taint can be done, for example, through multiple complex financial transactions or with crypto using a mixer. A launderer then tries to erase the origin to some extent.
• And if a launderer is really good, he or she pretends that the money was earned honestly through a small shop, in the casino or as a shareholder of a foreign company.

With increased internationalisation and digitalisation, the opportunities for money laundering have expanded. And the role of the Netherlands in the international drugs carousel means that the government must make above-average efforts in this area.

The trend is that the government likes to involve the private domain. Financial institutions, for instance, have been assigned a gatekeeper role and are required not only to carry out Customer Due Diligence (CDD), but also to report unusual transactions.[2] Financial institutions have commented on this extensively.[3] I think it is understandable that this role lies partly with financial institutions, given the shift towards a more data-driven society and the fact that they have at their disposal data that are also useful for criminal investigations, but the government must nevertheless handle this carefully and make better use of the data. At present, the efforts of the financial sector still do not lead to sufficient results.[4] To put it in financial terms: the ROI is still fairly negative.

It would be good if the government acknowledged that there is a great deal of unused mined data, stored and supplied by financial institutions, and also indicated how investigative services intend to make use of the mined data in the future, what government investments are needed for this, and within what time frame it will seek to increase the ROI.

The back doors abroad

The next topic is crypto-assets. All sorts of technical remarks can be made about these. This contribution does not lend itself to that. For now, I will focus on cryptocurrencies (and set tokens aside). What can we say about this on the basis of the academic literature? Little is known about the use of crypto-assets or, more broadly, virtual currencies in crime. The WODC recently commissioned a study into virtual currencies and courses of action for data-driven criminal investigation.[5] It showed that a certain reluctance exists on the black market to use cryptocurrencies. Moreover, privacy coins were also relatively absent as a means of payment. Prepaid debit and credit cards, such as PaySafe, were clearly used. Owing to a lack of data, this study did not involve an in-depth examination of the use of crypto in the organised market. The assumption is that crypto is nevertheless frequently used for storage and also for payment(you can take it anywhere with you on a USB stick, and you can also pay with it fairly anonymously). In doing so, criminals accept price risk and hacking risk as part of the bargain, but these risks can be partly diversified away.

The problem for criminals lies in the exchange, from cash to crypto and vice versa. Sometimes they need cash and sometimes they want to park it. That is why one occasionally sees criminal cases of this kind in which someone exchanges cash for crypto in a roadside restaurant. It is unknown how large the supply of such intermediaries is, but in principle it does not seem a really useful activity, or at least not a potentially system-disrupting phenomenon, because the intermediary is then left with cash again and has to do something with it in turn.

Exchanging money for crypto is, of course, easier if the criminal cash has already been deposited into a payment account, for example via Vietnam or another country where perhaps less strict AML rules apply. That money can then be transferred to a crypto exchange and used to purchase crypto.

In other words: organised crime can gain access to crypto via the normal payment system. And since organised crime and the crypto market are both global in nature, with different levels of national regulation, there are also loopholes abroad.

Against this background, it is easy to imagine that questions might arise within the Dutch financial sector as to how these back doors abroad will be dealt with, and how Dutch financial institutions, as gatekeepers making significant investments, can continue to make a meaningful contribution to a broader societal approach to combating money laundering, whether or not via cash or crypto.

The focus on regulating central systems

And now the third buzzword: transparency.Transparency can often be translated as: data are available and we would like to see them, and preferably have them. It is a given that the amount of data continues to grow strongly, that ever more powerful tools for using these data are emerging, such as ChatGPT, and that governments and the EU see (economic)salvation in a data state. There is ‘no way’ that this trajectory will be reversed in the foreseeable future. And in criminal investigations the rule is:what is available should also be used, within the statutory framework. So data on transfers of crypto from one person to another (and perhaps even holdings)are of interest and will also be mined.

What, then, is transparency of transfers of crypto-assets? It is making available data on the purchase or sale of, for example, a bitcoin. If such a transaction takes place via a (regulated) crypto exchange, the identity of the buyer and seller is known, provided the exchange has properly recorded that identity. These central exchanges are often of interest to regulators because a central component can then be regulated in one go, and all transactions passing through the exchange are given a degree of transparency. Investigative authorities can then more easily map the money and crypto systems in their investigations. There is not much to object to in that as such. It is understandable, useful and in principle falls within investigative powers. The same happens when investigative powers are used with regard to non-cash (giro) transactions.

In the first half of this year, a framework for this was already established at European level: the Transfer of FundsRegulation (TFR): ‘Today’s decision is bad news for those who have misused crypto-assets for their illegal activities, to circumvent EU sanctions or to finance terrorism and war. Doing so will no longer be possible in Europe without exposure – it is an important step forward in the fight against money laundering.’[6] Acaveat must, of course, immediately be added. This regulation naturally only concerns transfers on regulated exchanges in the EU. P2P transfers, that is to say sending crypto-assets between two self-hosted wallets, simply remain possible without verification. So in essence, two criminals can simply exchange cryptos with each other, for illegal products or criminal services, without an exchange being involved. But still, it is a step. The somewhat leaky basket has become slightly less leaky.

Concerned parties claim that these legislative changes will drive the crypto industry out of Europe because the compliance costs will prompt exchanges to relocate to more lenient jurisdictions. Such crying wolf is often something of a knee-jerk reaction on the part of businesses. But I can imagine that it is difficult for crypto-asset service providers to verify information on the originator of transfers coming from self-hosted wallets. The sense of ‘victimhood’ in respect of technocratic regulation may then lie in the fact that it entails a great deal of administration while at the same time reaching only a fairly small part of the crypto market. The EU could remove such feelings by presenting a more integrated vision of the crypto markets and by indicating how this regulation forms part of a broader societal approach to crypto-assets.

Conclusion

Nobody wants to become a ‘victim’ of government intervention. In the fight against crime, it is easy to understand that certain rights are restricted in a controlled manner, or that efforts are required of persons and businesses. It is nevertheless useful if governments frame the weak spots or future challenges of new regulation more clearly and make them more transparent, not only in order to keep the limitations of regulation constantly in view internally, but also to prevent those subject to the law from, where applicable, coming to see themselves more as ‘victims’ of government policy than as part of a broader societal approach to solving the problem.

This blog is an adapted version from: ‘Slachtoffers’ van overheids ingrijpen ter beteugeling van misdaad, Tijdschrift voor Bijzonder Strafrecht enHandhaving, https://doi.org/10.5553/TBSenH/229567002023009006001.Originally published 2023, updated October 2026.

Matthijs Nelemans is Professor of Financial Law Enforcement at Tilburg Law School and founder of Neemley.

[1] See J.A.E. Vervaele, ‘Historische ontwikkeling van het bijzonder strafrecht’, in: F.G.H. Kristen et al. (eds.), Bijzonder strafrecht. Strafrechtelijke handhaving van sociaal-economisch en fiscaal recht in Nederland, The Hague: Boom juridisch 2019, pp. 23-56.

[2] On the internal processes at banks, see J.T. Rakké & W. Huisman, ‘Motieven voor naleving van de wettelijke anti-witwasmeldplicht’, TBS&H 2020, pp. 5-11.

[3] ‘Poortwachterswerk kost Europese banken vele miljarden’, Financieele Dagblad, 20 April 2021.

[4] D.R. Doorenbos, ‘Strafrechtelijke handhaving van de Wwft bij grootbanken’, Tijdschrift voor Financieel Recht,25(4) 2023, pp. 110-117.

[5] V. Schrama et al., Virtuele valuta. Handelingsperspectieven voor data-gedreven opsporing, WODC report 3184,Delft: TU Delft 2022.

[6] Council of the EU, ‘Anti-money laundering: Council adopts ruleswhich will make crypto-asset transfers traceable’, 16 May 2023.

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