IRS Building. PHOTO: Cybercrime Magazine.

IRS Has The Hottest Jobs In Cybersecurity

Internal Revenue Service Agents Trace the Untraceable

David Braue

Melbourne, Australia – Sep. 22, 2021

When El Salvador recently adopted Bitcoin as legal currency, analysts warned that the move could open the country’s banks to exploitation by money launderers. Yet the risks of Bitcoin being used in criminal activity are hardly news for Jarod Koopman, whose work within the Internal Revenue Service (IRS) has overseen the recovery of over $1.2 billion worth of cryptocurrency during criminal proceedings this year alone.

That’s up substantially from just $700,000 seized in 2019 and $137 million in 2020 — and Koopman, who as director of cybercrime within the IRS — Criminal Investigation has been working in cryptocurrency enforcement for years, notes that wild fluctuations in Bitcoin’s value mean that the figure “is understated because of the value of cryptocurrency and its inflation over the last year…. with inflation, I would put that at around $2 to 3 billion.”

Indeed, he said, the IRS has already seized individual cryptocurrency accounts worth up to $1 billion each — highlighting the continuing associations between cryptocurrency and criminal activity that has raised its profile substantially among taxation authorities.

“We need to bring down the large number of cryptocurrency transactions that are conducted annually for nefarious purposes,” says Steve Morgan, founder at Cybersecurity Ventures and editor-in-chief at Cybercrime Magazine.

For the IRS, which has been investigating illegal financial transactions for more than a century, cryptocurrency is just the latest in the arsenal of tools that criminals use to try to skirt taxation, money laundering, and other laws.

“Cryptocurrency that’s associated with some type of illegal activity, whether the proceeds of crime or actually involved in a criminal act itself, provides us the justification to seize accounts,” he told Cybercrime Magazine.

The trick lies in proving it: the team then has to work through the legal position around the matter to convince a court to provide a final order of forfeiture — which ultimately gives the IRS the right to own that currency.

Making those cases is a collaborative effort by a team that “really has a wealth of knowledge when it comes to a broad spectrum of tracing components,” he said, noting that the IRS has been investigating and tracing crime-related cryptocurrency transactions since 2014.

“We have some outstanding agents that have developed the skill sets to trace, make attributions and really dive into these cases with extreme success,” he said, noting the team’s wealth of experts including computer specialists, computer scientists, data scientists, engineers, contractor support, a host of federal agents and analysts across the world.

“It takes a large effort and a big team to work some of these cases that are very complex,” Koopman said, “and that’s where we come in to really specialize in that crypto tracing and attribution aspect.”

Tracing the untraceable

In leading an investigative financial forensics team whose very purpose is to peel back the protections that have been designed into cryptocurrencies, Koopman has found himself spearheading a collaborative effort the likes of which he never imagined almost 20 years ago, when he began working with the IRS as a special agent.

The job seemed like a logical step for a one-time national lacrosse champion and hall-of-famer who graduated from Nazareth College in Rochester, N.Y. with a major in accounting, dual minors in economics and finance, and a concentration in computer information systems.

Working from the Rochester office, Koopman spent nearly a decade as an agent before he took over as supervisor. His acceptance into an accelerated senior leadership program kicked off a series of management roles that saw him working in analyst roles in identity theft and virtual currencies from the Washington, D.C. office; a role as assistant special agent in charge in Chicago; and, ultimately, as special agent in charge of the Detroit field office.

Yet his current post as director of cybercrime, which he has held for more than five years, has been particularly satisfying because of both the challenges and rewards it provides.

“You always hope to have that type of impact when you start a career,” he explained, “especially one in law enforcement and government service. It has all given me a well-rounded perspective of our agency and the different roles that are required to oversee and manage different program areas.”

Yet for all his financial crimes nous, the translation of these skills into the cryptocurrency era has proven to be particularly challenging — with the team combining specialized contractors and “self-taught agents that just have the enthusiasm and drive to excel at their job.”

“They do everything possible to learn the area, become involved in cases, and work alongside the computer specialists and scientists to do that type of work,” he said, citing the demonstrated value of an “embedded model” that brings together people with specialized experience and the right contemporary skill sets.

These teams are supported with internal training, which is built and refined inside the IRS, as well as external certifications and the academic expertise of people “who this is what they do day in and day out,” he said.

“They’re studying this area and becoming involved in not only the technology, but how it affects traditional finance, economics, and everything in-between.”

And while market competition means developing highly skilled cryptocurrency specialists does put the IRS at risk of losing staff to moneyed-up private-sector competitors, Koopman believes many in the team stay on for the satisfaction of doing the right thing.

“There’s something that draws these folks that really have that internal drive,” he said, “and that’s what we’re hoping to see as we continue to move forward — because we don’t see this going away.”

“It has become baked into our normal investigative components, as well as our normal financial systems, with a lot of different moving parts — so it’s an area that we need to really get a handle on.”

On the surface, a federal agency may not seem so cutting edge. But Morgan dispels that myth. “The IRS is a great career opportunity for aspiring and experienced cybersecurity professionals,” he says. “When you look at the cybercriminals they pursue, the complexity and magnitude of the cases, the IRS is a hot employer … and there could be a huge bump in pay for candidates with IRS and cybersecurity on their resume.”

David Braue is an award-winning technology writer based in Melbourne, Australia.

Go here to read all of David’s Cybercrime Magazine articles.