The FBI created the Virtual Assets Unit to spearhead the agency’s efforts alongside a network of distributed experts to combat the misuse of digital currencies in criminal activity. In this episode, Gurvais Grigg (former Chief Technology Officer, Global Public Sector, Chainalysis) gained insights from Patrick Wyman (Unit Chief – Virtual Assets Unit, Federal Bureau of Investigation (FBI)) into the intricacies of the FBI’s approach to managing and monitoring virtual assets.
You can listen or subscribe now on Spotify, Apple, or Audible. Keep reading for a full preview of episode 172.
The FBI created the Virtual Assets Unit to spearhead the agency’s efforts alongside a network of distributed experts to combat the misuse of digital currencies in criminal activity.
In this episode, Gurvais Grigg (former Chief Technology Officer, Global Public Sector, Chainalysis) gained insights from Patrick Wyman (Unit Chief – Virtual Assets Unit, Federal Bureau of Investigation (FBI)) into the intricacies of the FBI’s approach to managing and monitoring virtual assets.
Patrick Wyman shares insights from his extensive career focused on white-collar crimes and articulates the critical importance of fostering collaboration among personnel and divisions, highlighting the unit’s journey from a segmented array of expertise to a cohesive force capable of tackling financial crimes across all investigative areas.
This episode dissects the FBI’s innovative strategies to maintain efficiency and agility amidst the rapidly evolving virtual asset landscape, but also highlights the challenges the public sector has in staying ahead of the crypto criminals.
” We created the Virtual Assets Unit to be this one, one-stop shop center of excellence inside the FBI in order to provide subject matter expertise, operational tactical support, bear the administrative burden for the FBI, in terms of what we’re doing in the virtual asset space and bring in different experts from those other divisions.” – Patrick Wyman (Unit Chief – Virtual Assets Unit, Federal Bureau of Investigation (FBI))
2 | Patrick’s Journey at the FBI and Leading the Virtual Assets Unit
5 | Exploring FBI’s Approach to Virtual Assets and White Collar Crime
8 | FBI’s Virtual Assets Unit Unifies Expertise Across Divisions
12 | Enhancing Crypto Literacy and Leadership Engagement in the FBI
15 | Emerging Threat Typologies in Crypto Crime
19 | Managing Expertise and Resources in a Dynamic Environment
24 | Seizing Crypto Assets to Disrupt International Criminal Activities
29 | Challenges and Future of Cryptocurrency in Law Enforcement
33 | Building Sustainable Programs Through Strategic Planning and Growth
Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.
This website may contain links to third-party sites that are not under the control of Chainalysis, Inc. or its affiliates (collectively “Chainalysis”). Access to such information does not imply association with, endorsement of, approval of, or recommendation by Chainalysis of the site or its operators, and Chainalysis is not responsible for the products, services, or other content hosted therein.
Our podcasts are for informational purposes only, and are not intended to provide legal, tax, financial, or investment advice. Listeners should consult their own advisors before making these types of decisions. Chainalysis has no responsibility or liability for any decision made or any other acts or omissions in connection with your use of this material.
Chainalysis does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in any particular podcast and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material.
Unless stated otherwise, reference to any specific product or entity does not constitute an endorsement or recommendation by Chainalysis. The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by Chainalysis employees are those of the employees and do not necessarily reflect the views of the company.
Gurvais
Good morning, Patrick, it’s good to be here morning. Gurvais, good to have you. Thanks for being our guest. Today. We are sitting here in the historic FBI headquarters and speaking with Unit Chief Patrick Wyman of the virtual assets unit. I’m Gurvais Grigg, the Chief Technology Officer for public sector at chainalysis. It’s our privilege to sit down with Patrick today and to talk about the great and interesting work that the FBI is doing with virtual assets. And Patrick leads this for the Bureau, and so it’s a unique and special opportunity to sit with him and to learn more about how the FBI is addressing this matter. Patrick, tell us a little bit about yourself. Thanks.
Patrick W.
Gurvais, so a little bit about me. I’ve been in the FBI for about 16, going on 17 years. My entire time has been working in the White Collar Crime space. I came into the bureau in 2009 after having worked in the real estate title industry for multiple years. The mortgage fraud crisis was hitting, I decided I need to put my money where my mouth is on the complaining I was doing about all the mortgage fraud I was seeing. And so I joined the FBI, fully expecting that I would be, you know, forced to work Chinese gangs or something I knew nothing about. But the bureau did the right thing and put me on a white collar squad right in the beginning, which is good. And so I worked all kinds of different white collar crime, money from money laundering, wire fraud, mail fraud, identity theft, you name it. And that was for about the first six years of my career. And then I came to headquarters here as a program manager in the money laundering unit. And during that time, when I arrived, I was assigned, in addition to my program management duties, the initiative, which was our out of Cid, our virtual currency initiative, which I told my boss at the time, I I don’t know anything about virtual currency, so that’s okay, you know, we’ll figure it out. But it was a very unique opportunity for me, because it was a an initiative that was relatively brand new. It was 2016 and I did that joint or the temporary duty assignment here to headquarters for about 18 months. I did a joint duty assignment over to the usic to the Inspector General’s Office for nearly two years, and then I put my paperwork in to be a supervisor back at Washington Field Office, where I was lucky enough to become a supervisor of a white collar squad. There we had frauds and swindles, corporate fraud, intellectual property rights, gray squad doing a lot of great work out of Washington Field
Gurvais
WFO being one of the biggest offices in the bureau. You see, just about everything there we
Patrick W.
did, yeah, absolutely. And we had three different white collar squads all working in that space had the benefit of being the program coordinator for the field office for a while, which was both exciting and a challenge. And then the virtual assets unit came to be in about February of 2022 one of the things I had said to my supervisor when I left the money laundering unit and was working on this virtual currency initiative was, hey, I really think we need a centralized area to be working on this, something very specific, because of all the different efforts that need to go in and the administrative functions. And so I again put my money where my mouth is. When the unit stood up, I said, All right, I should probably go back and actually support what I said I would do. So I came back to the unit as a supervisor program manager again for a little while, and then moved into the unit chief spot shortly thereafter. So been a kind of a long and circuitous route, done a lot of different things. It’s been great the whole time, but now sitting here in the in the virtual assets
Gurvais
unit, yeah, that’s one of the fascinating things about a career in the FBI. No matter where you start, you end up finding yourself doing things across the spectrum. It sounds like you’ve had a breadth of experience that way. When I joined the bureau, I was a stock and bond broker. Came into the bureau and like you said, there, you know, you think, well, I’ll get assigned to work something. I ended up getting assigned working violent crime, something completely opposite. But it wasn’t very long before it got pulled back into working white collar money laundering. And so we end up finding our niche, don’t we?
Patrick W.
Yeah, we sure do. I kind of wish it would have been fun, I think, to have dabbled in maybe something different along the way. But like you say, you find that niche, and it, you know, you just begin to excel in those certain things. And it makes sense to kind of stick with it and keep advancing.
Gurvais
You get that opportunity to develop a deep expertise and knowledge about these types of things, right? Well, tell us a little bit. I appreciate you walking us through that journey, and I think it helps our listeners. You know, our listeners on this podcast will be across the spectrum. We’ll have law enforcement agencies, other public sector, regulatory intelligence. Uh, financial institutions who are maybe running fraud detection programs as well as just average listeners who are interested in this emerging space of virtual assets. In fact, I have to sort of correct myself. I oftentimes would say emerging space, we’re no longer emerging. We’re there and advancing so different, so different than it was just a few years ago. So tell us a little bit about what led the FBI to create such a unit like the virtual assets unit. Most people don’t even know it probably exists, although you guys are on all those press releases at the bottom. You know when you see a big crypto seizure or case?
Patrick W.
Oh, it’s really good. When we show up on those, we like to be there, that’s for sure. So really good question. Again, I’ll go back to around 2016 to 18 when I was a money laundering unit supervisor. The Bureau was, was somewhat segmented in our expertise in this space. So Criminal Division was doing one thing, counterterrorism division, something else, cyber division altogether. You know, something different and our our subject matter expertise was disparate. We were not under the same roof. We were finding that we were kind of running up against each other in different investigations, had overlapping information, which would have been helpful to further different investigative matters. But then there’s also the just the expertise piece of this in the messaging out to the field. What is the right messaging to be providing? Where do we start looking in terms of policy on virtual asset matters? And then, of course, there’s a huge administrative function that was kind of out even just at the individual field office level, we weren’t very efficient. So in 2022 in somewhat of an unprecedented way, Criminal Division and cyber division came together and said, Hey, let’s figure out a way to cobble together resources, both personnel and budgetary space, and get all of the experts under one roof. And that’s what they did. So we created the virtual assets unit to be this one stop shop, Center of Excellence inside the FBI, in order to provide subject matter expertise, operational, tactical support, that sort of thing, bear the administrative burden for the FBI in terms of what we’re doing in the virtual asset space, and bring in different Experts from those other divisions. So we would have touch points and belly button areas for each of those different divisions. So the way that the unit is set up is we have personnel that are Criminal Investigative Division bodies, along with embeds from other divisions. So cyber, counterterrorism, counter Intel, but we fall under the financial crime section, so that the goal is to have virtual assets unit really touching on a lot of different areas, but with no specific division that we report that we’re focused on. We focus on all virtual asset matters, not just one particular threat stream.
Gurvais
Well, that’s an interesting point you bring up about how you focus on across the spectrum. And I think many people, at least initially thought when they would hear about virtual assets. Well, that’s a cyber thing. That’s for the elite cyber units in an organization, but your experience is quite different. Now, as you see this coming across a broad spectrum of program threats, tell us a little bit more
Patrick W.
about that. Yeah, absolutely so that it used to be a cyber thing, right for sure, and it was the form of payment of choice in terms of ransomware or on our dark mark, dark net market cases. But no longer is it just a cyber thing. It’s it’s an everything thing. We see it in all of the cases that we investigate, all of our different case classifications across all threats. So we really have to be somewhat of we don’t have to know the underlying threats specifically us. We leave that to the experts that are doing that, that work out in the field and and the program management entities that are here at headquarters to supervise those cases, and we simply plug in to provide the cryptocurrency expertise where it’s necessary. But it is across, you know, all threats, I think we’ve identified it in, you know, over 2200 different cases that we have, and across all of our case classifications at the moment.
Gurvais
Well, when you follow the money you find the people responsible exactly, and a financial aspect exists in all of our cases. Tell myself our listeners probably find themselves somewhere along this spectrum that you outlined, where maybe they’ve just started a program, or they maybe have that expertise sort of dispersed across their organization, and they’re looking to try to gain those synergies. How did the Vau and your leadership go about pulling all those resources together to create that synergy?
Patrick W.
Sure, so I’m I benefit from some other people having done that really hard work before I became the unit chief, and I’ll simply take credit for all the great work that they did. But it was a. A difficult task in the very beginning, because, again, as I mentioned, we have those disparate sets of expertise that were out there, but there was a core group that kind of had been in this space for a really long time. And interestingly enough, it wasn’t even in the agent population, right? We had one of our leading intelligence analysts in the space. She wrote the very first intelligence product the FBI ever had on this. I think it was back in 2012 maybe even a bit before a really strong staff operation specialist that was in the Criminal Division, and then working with some of the agents in the money laundering unit, that’s that’s really the group who came together and said, we really got to put this thing together.. So some different decisions were made on reorganizing resources from a lot of different places, primarily out of the criminal division at first, with a few people coming in from cyber. And we just picked the right people that knew this, this space really well, and then kind of canvassed for others that might have an interest. And so then it became, all right, let’s post for new supervisors with expertise in this space, and you kind of cast that wide net see what we get that’s coming in. And we got really lucky with some of the experts that came in. I mean, real forward leaning, people that are out in the field on the cutting edge of this decided they wanted to raise their hand and help help build it out. We had an unbelievable Unit Chief that led this through the effort of getting it stood up, and we had some, you know, executive section chiefs that really put their their weight and muscle behind it, to say, We got to get this done. So really fortunate.
Gurvais
Isn’t that great? When you have people who’ve got vision, can sort of see where this could go. First time, I became aware of of blockchain and and and virtual assets in the bureau were those experts, those analysts, that were sort of writing that those threat outlines. So it’s great to hear how that comes together. And, you know, looking at this environment, tell us a little bit about the tools and systems that use to sort of cobble all of these resources together. Yeah.
Patrick W.
So I mean in terms of bringing the resources together. You know, that’s just kind of old, the old fashioned. Let’s find the right people and post for jobs and that sort of thing. But for us, the way that we’re our unit is set up in a way that we have the subject matter experts that sit here in headquarters and are kind of that ingest point for a lot of different requests for assistance. But then we also have a decentralized group of folks that are helping us work. So we have our virtual currency Response Team, which is an auxiliary duty out in the field, similar to being on the Evidence Response Team or squad or SWAT something like that, except we don’t go with night vision goggles and cool guns. We’ve got laptops and things like that pocket protectors. But you know, that’s a disparate group, again, of different people who have just raised their hand and say, hey, I want to help because I have this knowledge. So when New York Field Office has a case that’s just coming in and they need assistance with Blockchain analytics or seizure, they’ll make that request of us, and then we we feel that out to our team and look for one of those folks to raise their hand and say they’ll assist. So, you know, we could have someone in San Antonio doing work for someone in New York, which is the beauty of some of the decentralized piece of this, but the tools we have to provide, not mentioning specifics, necessarily, but you know, as you know, we have we utilize blockchain analytics at a on a routine basis. We have to, in this space, just don’t do it without it. Can’t do it without it. Yep. I mean, we’ve tried to do things internally, on our own. You know, in the very beginning we were trying to figure out, all right, well, maybe we can just build, you know, start looking at the Bitcoin blockchain and and, you know, just build our own analytical tool of some kind. But that becomes a challenge. I know we’ll talk about some of this a little bit later, but it really does help in this space to rely upon public or the private industry who can move with great agility and speed, and to rely upon that, that that expertise that’s available. So the tools that we provide are, you know, Blockchain analytical tools out to the field offices in order for them to be able to do some of the tracing and analysis that they need to in all all pieces of the case. So there’s pieces of that that are going to be strategic and tactical intelligence driven. But then there’s also a major function, of course, which is related to following the value the illicit value through laundering techniques, or where it originates from, trying to get ourselves back to attribution points where we can identify new investigative leads or subjects. So all of that comes through us. We manage it from a centralized location here, and that’s part of that administrative function that we do. We’re much more efficient that way. As opposed to having 55 different field offices try to manage their own tools and do their own thing, we bear that burden for the field and then get to work with companies like chainalysis and engage on what might be other solutions that we can have down the road.
Gurvais
It’s fascinating to hear how you really are operating this distributed network across the field and across the globe. Right as I travel around the world, meeting with other agencies who support or work with the Bureau your name, this organization, this work comes up all the time, and people see how that partnership of distributed individuals who are working against this threat can come together to solve the problem. That must be a challenge. How do you make sure they’re getting what they need when you’ve got training needs? And people are all at different levels, some of them who are just barely coming to know what is blockchain, and others that are these outstanding experts you told us about, how do you level that playing field? That’s a challenge.
Patrick W.
So most of it is, frankly, a little bit trial and error. So one of the things that we have always identified is that there is a at the front line with the agents and analysts that are sitting at the pointy end of the spear in the field offices. There’s a lack of fundamental knowledge in this space, or there was so in an effort to try to repair that the again, the original team that kind of stood up Vau and even before those really strong intelligence analysts and staff operation specialists helped put together a quick training program. So we came up with training programs on the initial stage, which was 17 different training videos. And I will put it up against any other virtual academy training anywhere, because it was the most entertaining in my mind. I didn’t take part. So I will just give credit to everyone else who did that. Super entertaining, but what we’ve now recognized is those 17 videos were terrific at the time, but now there’s a bunch of gaps, because the space change ecosystem has changed, and so now we’re where there wasn’t, you know, smart contract swaps that were happening or vulnerabilities that we needed to worry about. Now we’re getting questions from the field that say, Well, what about this? What about that? So we’re trying to move a little bit more agility there by creating quicker on demand type courses, not quite as long, but more really topically focused that an agent or an analyst in the field says, I’m trying to come across, I don’t know this. They go look at our website for learning resources like, oh, look, here’s a video all about smart contracts. You know, watch that video. Maybe it’s five to seven minutes, and then at the end of that, it’s reach back out for us and let us give you
Gurvais
additional guidance. You know, you got to follow that type of a process. When I was the Chief Knowledge Officer here, we used to talk about bite, snack, meal, feast, right? You go down that continuum, yeah. And more often than not, people are nibbling and biting, but then as they dig in, they they they want that dinner and that feast, right? And so it’s a challenge to keep that content vibrant, because this ecosystem changes all the time. Yeah, it really does. One of those is your leadership, right? It sounds like and I know from experience, you’ve got strong leadership support and a recognition, both here within the bureau and across the street at the department, for the impact virtual assets, digital assets, are having on the global economy, but also in the criminal underworld and national security space. So tell us a little bit about how would one goal about keeping their leadership informed and and keeping taking them on that crypto literacy journey.
Patrick W.
Well, that’s a that’s a challenging part of this process, for sure, because you know, as you know, great when we have great leadership, they often don’t stay where they are for very long, because there’s other places that they need to go. And so we’ll get our hooks into into a leader, and start getting them, you know, up to speed on what this looks like. And they begin to get pretty adept. And they’re comfortable. They’re comfortable briefing on it. They are able to push information up. And then that person who, because they’re so good, will be tapped to be the next SAC, or they move on to a DA D spot, da D, Deputy Assistant Director SAC, Special Agent in Charge. So we have to try to keep the briefing cycle up as much as possible. And really what we do is we try to brief up successes so where our team is tapping in and providing good support to the field, where we get a win, that information is already being briefed by the program management side. So whatever the threat is, is briefing that up the chain. We want to make sure that our financial crime section and the cyber folks are clear. By the way, vau was part of this. Here’s what we did, and what happens is that information kind of meets at the middle where, you know, it’ll be briefed up by let’s just say that it was. On a CTD squad briefs up a great piece of work that they’ve done that had crypto Nexus. Our our leadership will also be part of that same meeting, and we’ll have a chance to say, hey, vau was part of that. Here’s what they did. Well, when we brief up a success, what then happens is questions usually come right back down. What do you mean by this? What happened here? Can you explain it? So we’ve kind of set up some generalized desk references for some of the executives, like when we’re talking about this, this is what we mean. And we just try to get every time a new briefing cycle happens, a new leadership position comes in, we brief those people up on what it is that we’re doing. What is the job we’ve actually gone so far as to, every time we have a new sac Special Agent in Charge going out to the field offices, we have a chance to brief, not just us, but all the division. They go through a whole briefing cycle, absolutely well, they’ve looped us into that now, where we have a chance to be able to say, hey, here’s the resources that we provide. Here are the members of the vcrt that are in your field office. Here are the tools that you have available to you. It gives you a front end chance to have that executive be aware of what it is that we’re doing.
Gurvais
You know, the fact that that has been brought into the special agents in charge orientation briefing speaks volumes for those not familiar with the FBI culture. That’s significant, right? Because, though they isolate that for those threats and those types of things that they most need to be aware of, because, as they lead and manage their their field offices, so that’s wonderful to hear.
Patrick W.
Yeah, no, it’s been successful. I mean, I think there’s so much that they’re trying to, you know, grapple with, and you that’s eating an elephant at that particular time, you got to really figure out what that’s going to look like. To look like. So those briefing books that are given out, I know there’s a lot to ingest, but even if they have an opportunity to say, wait a minute, someone’s talking about virtual assets, I just heard something about that, you know, let me thumb back, remember this and go find what it is. So lots of briefings, as many as possible, to try to keep the message, you know, I sometimes say, especially with Vau, not everyone is aware that we exist. But even inside the FBI, not everyone is aware that we exist. We ended with a big splash initially, and you throw a big rock in the water, you’re going to get lots of ripples, but those ripples die out over time. So what we’ve tried to do is keep up a really good communication cycle, whether that’s, you know, putting on the the internal FBI, you know, news page, a picture of our unit sitting with alpacas that we had come in from a local farm, which, if you haven’t seen it, you know, an alpaca with the with the big hair, sitting as a focal point on the website. Is click bait. It’s great because people click on that, which then results in people reading about us. And so it’s constant messaging, trying to be creative about what we’re doing. That’s where the learning track that we’ve created comes in. I’m sure people maybe even are sick of hearing of what it is that we have to offer, but we just keep pounding away.
Gurvais
You know? You think that, but then you’ll bump into somebody who has scarce or limited knowledge about it, right, true. You always have to be messaging, yes. So what are some of those trends that you see out there in the space that are exciting to you and maybe even concerning? Tell us a little bit about those trends that you, from your position in the virtual assets unit, are seeing.
Patrick W.
So like speaking, you know, threat landscape or trend wise, what we are seeing, it has always been the case our illicit actors are equipped, are quick to identify and adapt everything. They’re early adopters of new technology.
Gurvais
They don’t do privacy impact statements. No, they sure don’t. They don’t
Patrick W.
have to do all there’s a lot of steps that our illicit actors don’t have to take, that that we do, which are a challenge, right? So I think on the one of the things that we see right now is the use, I think, of AI coming in as a as a real challenge in that, you know, just on the scam front, our scammers are able to leverage AI to make themselves bigger, faster, stronger, more efficient, not have to have one person necessarily sitting on a phone and texting back and forth with the crypto investment fraud victim. Now they’ve just got bots that are doing that for them. Large language model learning to say, Hey, this is the response to just
Gurvais
get back perfecting the scripts on what works exactly
Patrick W.
and eliminating some of that scripting problems that were a red flag to someone to see, maybe with misspellings or nonsensical responses, now they’re getting much better, so that being leveraged against us, then is something that we need to be trying To jump into and make sure that we’re leveraging ourselves in a way that will help make us bigger, stronger, faster, right? So on. It’s kind of a double edged sword that that, AI concern, AI though, is one that we have to we, especially on the law enforcement side, have to be very thoughtful about and a. There’s a lot of ethical concerns related to how we leverage that. What are we going to do with it? We can’t have an AI bot swear out a warrant for us. It has to be, if we’re going to do the analysis and the work, it still has to be me or an agent in the field who is raising their hand and saying, I know this happened, and here’s how I know it happened. And I just say that I pushed some button and it told me we have to be able to get to the to the end result.
Gurvais
That’s the integrity the American people and everyone is counting on 100% right.
Patrick W.
And I think there’s an expectation that we’ll do that, and we’ll do it right, to avoid false positives and things that are, you know, are not going to meet those ethical considerations that we have. I would also say that the ability of our illicit actors to get into this space and and to coach the general public on how to get into this space is is a challenge. So, you know, used to have to try to convince someone to go to the bank send a wire. When they did that, there was a lot of different steps that had to happen. And again, a lot of gatekeepers in that process, right? And this is just in the fraud space. Lot of people putting their eyes on it who have the chance to raise that red flag. You know, now we’re hearing we work with our local law enforcement partners who are talking about a victim that just that they just worked with who was coached to go to a crypto ATM machine and feed their money into it, and there’s no one there to oversee that. I mean, there are AML Compliance and the kiosk companies are doing, you know, a good job trying to keep up with this as best they can, but they can’t be in every single spot at every single time to try to oversee or be that gatekeeper. It’s just so easy to get into this crypto space as a fraud victim, for sure, that that, I think, is a is a real challenge for us.
Gurvais
Yeah, this frictionless environment that we’re moving towards at great speed has and holds a lot of promise, but it also creates frictionless fraud, right?
Patrick W.
And, yes, and, and then the value movement. If let’s take it out of the fraud space for a moment, you put it in, you know, ransomware, or we put it into nation state actors, or we put it into the terror financing realm. Those are just things that are, that are concerning. But thankfully, you know, we’re looking at those we’re we’re, we’re on top of it, and in making sure that we’re trying, at least to try to stay as far ahead of the threat as possible, or at least with an arm’s reach, as you know, it’s running maybe a hair faster than we are.
Gurvais
Yeah. Well, exciting, Patrick, so some of the challenges that you face in this space, I’m sure are not unique to the FBI. If we were to talk to other partners around the world, I’m sure many of them would say the same thing, or even financial institutions are trying to get their arm around this to protect their customers, or crypto exchanges. So walk us through what are some of those challenges look like, and why are they such challenges?
Patrick W.
Well, going back to the educational piece, I think one of the biggest challenges is just having is just having the right people that understand this and and know how to how to tackle this problem. So you know, making sure you have your your pool of personnel is as deep as possible. And what you know challenges come with that as we, as we train people up, either they move on to because they get promoted, or perhaps they go to the private sector that that happens. It does happen. Yeah, it is does happen. And it’s just kind of one of those, I’m a victim of that and a blessing, right? Exactly, right? But then we also have the skills that that go, you know, not just understanding it, but then, okay, now I understand it, now that I can recognize it. What do I What do I do to investigate this? How do I handle that? And as I mentioned before, you have like a special agent out in the field, maybe working on one of these cases, but then they’re pulled away for whatever reason. They’ve got a special assignment, they have to do the priorities. Don’t get to choose your threats. Do you exactly? Sometimes you’re working on something different for a period of different for a period of time, or you’re going to go prepare for trial, you know, for two months, and then you have a three, you know, three or four week trial, okay, well, it if that person who has the expertise is, is, I’m just say, put on the sidelines for a little while, then I don’t have that resource. So we’re trying to figure out how better to manage those resources and where to put the time and effort, yeah.
Gurvais
How do you broaden the base of talent so that you can absorb those kind of changes? And what can technology do to fill some of those gaps, to accelerate expertise?
Patrick W.
Yeah, so, you know, I think some of the challenges that you run into are where best to put the human capital resources, where best to put the budget resources that you have. You know, everything’s finite, and so you got to figure out, all right, let’s best triage this as we can. And sometimes that requires you to, you know, retract from here, to bolster in this spot. Yeah. So it’s kind of a at least from the management of this unit perspective. There’s a lot of moving around, of, you know, simmering to, like, high boil, and you just have to be able to move these things around, depending on what’s important at the time. And sometimes that’s a day to day change, and then sometimes it’s just a yearly let’s strategically look at this. Well, the fact
Gurvais
that you’re managing a distributed network of experts across the country, and someone in Phoenix can help someone in Baltimore or someone in Tampa can help someone in Washington State, gives a little bit more flexibility than the traditional programs have, where the resources are embedded in that geolocation to address a geo threat.
Patrick W.
Yes, that is helpful thing, and especially on the seizure front. So in this there, we only have a finite member of a number of our team that are really trained up on the seizure of crypto and are outfitted with some of the resources that we have. We’re trying to solve that now, to just make the resources available across all field offices with the expertise sitting with, you know, not the select few. We want to get it as as large as possible, the expertise, but that just takes time to build that up. But on the seizure front, for sure, it’s nice to have those, those deployed assets that we can move around as necessary, send them to a search site to be able to help with whatever the seizure needs to be and internationally. I mean, we’ve helped our international partners in this space. We’ve helped our local partners, you know? And a lot of that just comes to the more we can spread the message, and not just us one way, right? And we also learn from our partners. Being the Dutch, are amazing in this space, and so we’re able to work with them. And, you know, we we talked to a computer scientist over the Dutch National Police, and we were having this conversation, oh, this was really simple, you know, we just put this thing together and, like, wow, simple that went straight over my head. Some amazing work, right? But thankfully, I had some folks that were pretty smart in this, and we’re able to keep up and, you know, we leverage the information and best practices that they have as well.
Gurvais
So I love hearing you talk about seizures and asset forfeiture, right? Because unless you take the money back, you don’t impact and dismantle organizations, they’ll just steal again. But when you take the money, it makes a huge impact. I want to talk a little bit about successes, and I know cases like these take a long time sometimes to get through adjudication, and so we only really talk about them after they’ve been successfully adjudicated, right? But you all have been doing quite a bit with seizures. Probably most of our listeners have no idea the impact that seizures by the federal government have had over the last several years. Tell us what that looks like, and why is that so significant? Yeah, well,
Patrick W.
I mean, it’s, as you say, the if we can seize the illicit value that’s tied to whatever the criminal activity is, that’s a win. And the
Gurvais
government doesn’t want to be thinking return on investment, but it really is
Patrick W.
absolutely I mean, I think inside of the FBI, the work that we are doing, and some of that, that seizure work that we’re doing on the outside, which then goes back to if it’s not going back to victims, which is critical in the most important step, of course, on the fraud front, for sure, and then they are victim type cases. We want to make sure we’re seizing that value back and trying to restore those victims. But in the area where either we don’t have name victims, or we’re not or we just have a nation state actor, for example, if we can seize that value, then that value is coming back, and we’re going to put that into the asset forfeiture fund. You know, one of the things that that we try to, we talk about educating leadership, it’s also educating on what is a what is a win, and what does a win look like when we don’t have the ability to put handcuffs on someone that’s maybe sitting in an arbitrage area, a country that’s not going to be cooperative for extradition, we have to try to inject into this financial flow movement some sort of friction where we can, and to disrupt mitigate that activity as best we can. And in some situations, that’s simply either freezing or seizing the value where possible, because even if I can freeze value and have it just orphaned on chain where it’s never going to be cashed out, the illicit actor is not realizing the gain to that activity. And that’s still a win. It’s not the win that we normally define it as, but it’s still a win, and it’s an important win to try to help you know our our executives understand. So then we’re having conversations with policymakers, and, you know, in other conversations, in terms of budgeting, what that looks like and why it’s important.
Gurvais
You know, it really takes a whole of governments to be able to address this, actually, as you say, these cases are almost never local, right? And there is an international aspect in almost every one of those, whether the exchange that the money flowed through is international, whether the perpetrator or even the victim may be and so, you know, the FBI is uniquely positioned to be able to coordinate this whole of government international approach. It’s fascinating to hear you talk about that. I wanted to pivot to lessons learned. One of the things the. FBI excels at, is taking a look at past cases and think, all right, what did we do? Well, how could we improve? And who do we need to share this with? So tell us a little bit about some of those lessons learned, and what you do as the chief of this unit to capture those lessons learned and make sure those are propagated.
Patrick W.
Yeah, so, I mean, I think in the lessons learned department, it’s usually, it’s all by trial and error, you know, we encounter a problem, and then we learn more from our failures. That’s exactly right. I mean, that’s it. And then we say, All right, well, what did we not do right here? And that can be something as simple as, you know, we’re going to do a search, and we weren’t prepared for the type of crypto that we needed to seize because of that we, you know, by the time we were able to get prepared to seize it, you know, we lost some of the value that was available to us, or it got moved or, you know, in the early stages, you know, maybe we weren’t accounting for the possibility that there was a another co conspirator who had seed phrases or private keys went back to do a seizure, and where’d all the value go? Right? And this is a long time ago, but those are things you learn from and then you build out all right processes and procedures to fix that in the future. I think we try to go with a very belt and suspenders approach to a lot of things to mitigate risk, not only for the the enterprise, but also for the individuals that are out working in this space. And we do our best to share of lessons learned as soon as they as soon as they happen. So our unit is usually a spot that will be notified of a problem, something that happened, and then we’re able to promulgate that messaging out to our field very, very fast. And you got to move fast, right? Because the next search could be happening where something happened, you know, an issue comes up. So not only through the VCR team members, those deployed people, they’re like reaching out and saying, Hey, you got to go communicate this through to your field office, talk to the people that are there. We also have our internal working group, which, you know, has on calls that we do between, you know, 1012 100 people that are on these calls that we do on a monthly basis. We’re, we’re bringing in, you know, partners to help teach us up on different things you guys have participated in those in the past, where it’s, you know, we’re looking at this sort of tracing, or this sort of laundering movement, what does it look like? And so we’ll share that out with the teams. But, you know, I think on the the lessons learned front some of the biggest pieces probably come to seizure, but it also, I would say, come to the forfeiture steps. So in working with US Marshals, you know, just like we’re advancing, the US marshals are advancing tremendously. The US Marshals, for our listeners, are responsible for well, so they handle the actual forfeiture of the value. So when we do a seizure and it’s actually going to be forfeited, there’s a forfeiture order in place, we’ll send our virtual assets to the US Marshals, and then they actually liquidate that to make victims whole, or to have those funds go to the asset forfeiture fund. So the marshals, you know, we’ve worked closely with them, but there’s they have certain limitations, just by requirement of the value of the different types of cryptocurrency that they can take. So you know, a quick example here is making sure that if we’re going to convert some value that we have that we seized into something that the US Marshals will be able to receive from us, we have to be very careful about how we move that. And if you’re going to use a swapping service of some kind, to be very cautious to make sure that that swapping service is one that is legitimate, right? You’re avoiding malware and other things that can possibly happen. So the number of things that we could learn is too much to fill a book, right? But we have to be on top of it, and that’s where the sharing of information with our partners comes in. I think we can. We’re all doing this different work at different times. DEA may experience a challenge that we haven’t seen yet. And the good news is we have these really close relationships that they’ll say, Hey, have you guys ever seen this? And oh, man, we haven’t seen that before, but thanks for putting it on the radar. Now we’ll make sure we get all the messaging out to our field office, and then vice versa.
Gurvais
You know that interagency cooperation is so important, it’s so good to hear and reassuring that how close this and tight knit this community is, and the public private partnerships that happen where that threat intelligence is being shared between financial institutions or with private technology companies and back and forth. So that you can stay up to date on how this is changing, I want to invite you to go with me to sort of the proverbial crow’s nest for a moment. So, you know, ancient mariners would put tall masts on their ships, and then they would put somebody up there at the top, so they could see over the curvature of the earth right and see threats that are far off land or ships that may be approaching. So let’s go up to the crow’s nest for a little bit and sort of peer over the horizon in the position that you’re sitting sitting in. And what do you see coming? How’s the space changing? And what do we need to be thinking about for the future?
Patrick W.
Well, that’s a, that’s a that’s a tough question. I think we’re probably in store for more of the same. And but by that, what I mean is the our illicit actors quick. Quickly adopting to new technology as it changes, and our need to be able to try to stay ahead of that, or to keep up as best we can on those movements that are happening. I kind of go back to the AI piece of this. A little bit I think AI is going to is going to make part of our lives easier, because I think we’re going to figure out ways to better leverage that internally. But I also think our illicit actors are going to continue to jump into that space, and I think it’s going to make it more complex, if you look at this just in the laundering sense, when we have major thefts that happen, smart contract exploits and that sort of thing, the speed at which the value is now laundered,
Gurvais
it’s very clear that it can be machined and set up ahead of time
Patrick W.
exactly, and that’s exactly what’s happening. So our ability to try to get ahead of that to an interdiction point is much more challenging. And so I think, you know, on the horizon, that’s something that is a little bit of a concern. You know, I do foresee that on the horizon, probably in the next few years, that there may be some additional left and right limits that come into the space that I think private industry is looking for, which should, should be helpful, at least, in understanding what the left and right limits are, which then where we figure out where law enforcement can plug into that, or where the USAC plugs in. And, how do we mitigate the various threats that we have responsibility for by just leveraging the tools that are available to us? I think as we look down the road here, I do not foresee cryptocurrency being used less in illicit activity I see being used more so, at least internally, just kind of keeping it inside the FBI at the moment, my horizon and kind of what I’m looking at goals wise, what we want to accomplish is, and I’ve told this to a few, your team, multiple times, that in the next five years before I retire, which actually is less than that now, but my goal would be that the front line personnel that are in the field offices have enough of this knowledge and the tools available to them to do the lion’s share of this work on their own, right off the bat, with my unit being queried for the most complex activity. So really, over time, my unit, my unit should, should shrink a little bit, the deployed assets should grow, but the unit management should, should shrink a little bit, because the hope is that the expertise will be there. So looking over the horizon, not necessarily at the threat, but more internally for the Bureau, that that’s kind of where I see it going. That’s my goal, to get it there. It’s a major upskilling challenge that we have ahead of us, and also looking ahead at the future, what does it look like? What are the actual needs? How many people do we have working on this? Who should I be putting the tools in the hands of those are questions that we’re constantly battling with. And you know, that’s what I see over the future, is just kind of trying to figure out what that looks like as it becomes more clear in the coming years.
Gurvais
Yeah, I think you’re absolutely right. In the early days, when I was working counter terrorism and terrorist financing in particular, we would be talking with financial institutions, and I used to tell them, you’re more likely to see the next Mohammed atta, who is one of the hijackers, then we will, because you’re interacting every day. And so broadening that base of knowledge out there to that endpoint, agent and analysts who are looking at the XYZ case, having them be aware how to spot a crypto opportunity right to even ask those questions. Most police agencies, as I travel around the world, don’t even have that as part of their ingest to say, does the subject of my investigation use own or trade in virtual assets, right? And asking those questions up front, they come to realize, Wow, we didn’t realize. We were unaware that it was so impactful on our cases. So I agree. So let’s pivot now as we wrap up, you know, there are people out there listening to this podcast. Some of them are in law enforcement agencies or public sector or maybe a regulator or financial institution. What advice do you have for them about how to establish and grow a program like this? What are some of those pieces you would have
Patrick W.
Sure so i think i. Uh, the advice that I would have, or kind of lessons learned there too, is, as I said, the the force and momentum that went into putting this unit together on the front end was significant. We had a lot of different movement all in the same direction, people pulling on the same rope, same time, which was great. The difficulty, I think, that that you have in building something like this and to make it sustainable is thinking multiple years out. And that’s not to say that, that that didn’t happen when it was put together. It’s just what are those things that are going to be the things we have to deal with identifying additional talent. When you put the net out there and you cast wide in the beginning, and then you bring in those experts, who am I going to backfill that expert with? So it’s building the bench of personnel that can do this. It’s how do you grow the the diversified team out in the field, the decentralized team into something that is the most logical people in the field office to have working on these particular matters. How do you give them all the tools that they need? And then what does that look like? What is the responsible growth? Are we going to grow by 10% 20% 25 don’t know. So trying to look at that. And then when you grow that way, there’s out your costs that you have to look at. And so when you build something like this, I think it’s helpful to say, All right, what is the immediate here and now and then? What does this look like in three years? What does this look like in five years
Gurvais
down, not just win the championship this year? How do we stay on top?
Patrick W.
Right? If you can, that’s, that’s really good, right? To be a dynasty would be nice. So, I mean, I think that is, you know, some of the advice that I would have, I would say it’s important to focus on, you know, some of the little things you focus on doing some of these little things right. And if you’re doing it right from the small piece, the big stuff begins to take care of itself, because you’ve built your case, the work you’re doing on a really solid foundation. And so, you know, I think just kind of coming up with a way to look to the future, budget for the future, not just financially, but with personnel and that sort of thing, and, frankly, or equipment, all of those different things that one needs to say. All right, what does this really need to look like? And then let me, let me build towards that with the ability to pivot and to adjust as you need to. Well, this threat
Gurvais
environment is definitely growing and changing. I remember previous director made a statement before Congress a little over a year ago and said, if they took everybody in the FBI work in cyber and focused on just the China threat, they’d still be outnumbered 50 to one. So this is definitely a big space, and it’s not just isolated for the criminal actors, the nation state actors are deeply involved, and so you’ve got your work cut out for you, for sure, but it’s reassuring to hear someone who has such a vision and outlook for it in an organization that has made this a primary focus with the support of the department. So if people wanted to learn more about the Vau or the work of the FBI? Where could they go? Yeah, so I think
Patrick W.
one of the best places there’s weird. There’s not a lot of information about Vau that’s forward facing. It’s more of an internal thing inside the FBI. But we do share information through with our our law enforcement partners, through leap and so there’s, you know, touch points into us. From there, there’s a ton of information about the work that the FBI and the whole is doing in the virtual asset space on IC three. And so whether that be public service announcements or other information that is out there and available, and then I think it’s really just probably reaching directly back out to the FBI internally, and then that’ll trickle down to where it needs to go. But our law enforcement partners know how to get a hold of us, and that’s a good thing, because we’re able to share information, and we leverage the private sector. You know, you’ll have people that are listening to this, that may have an interest or would like to be able to reach out, and we know that they can inject through you to get a hold of us as
Gurvais
need be well, you’d invite them to do that. And I appreciate the the insights. Patrick, it’s been a pleasure to sit down and talk with you today. This was fun, yeah, to learn more about what you’re doing and how the FBI is making such an impact in leading in this space. You know, it takes a team to get this done, and we appreciate the opportunity to partner with you to help combat the illicit use of virtual
Patrick W.
assets now. Well, we appreciate the partnership. Next time we do this, you get to tell me the stories about your career
Gurvais
that’d be great. Love to see you again.
Patrick W.
Appreciate it, sir.
source
Ad Choices
