ATO targets crypto tax evasion with blockchain analysis tool tender

The Australian Taxation Office has launched a tender, seeking a sophisticated blockchain analysis and investigation tool to bolster its capabilities in detecting crypto-related tax evasion and financial crime.

The request for tender (RFT) outlines the ATO's requirements for technology that can navigate the increasing complexity and pseudonymity of cryptocurrency transactions.

"ATO works with partner agencies both domestically and internationally to detect and disrupt the most significant tax and financial crime concerning crypto assets," the tender documents say.

"Due to the nature of these risks, and the growing adoption of crypto assets globally, teams involved in this work face a persistent and growing demand for crypto asset intelligence and operational capabilities."

"The ATO has therefore identified an ongoing business requirement for a blockchain analysis and investigation tool to enrich existing data and capabilities, as well as enabling it to keep pace with the evolving blockchain and crypto asset environment and related criminal misuse. Product requirements vary based on user roles, which range from basic identification and quantification/valuaation of crypto asset activities, through to highly complex analysis, tracing and investigation activities," the tender states.

While the tax office's current crypto asset data matching program has shown some success, the ATO acknowledges the need for enhanced intelligence and operational capabilities to keep pace with the rapidly evolving cryptocurrency landscape.

The desired tool must offer comprehensive search functionality across major blockchains including Bitcoin, Ethereum, Tron, Solana, Polygon, and BNB Smart Chain.

Other mandatory requirements include the ability to identify and map transaction activity, group crypto addresses controlled by common entities, and identify high-risk entities such as crypto mixers and dark web marketplaces.

The tool must also incorporate geolocation data with a focus on Australian activity, including internet protocol address observations and identification of virtual private network (VPN) usage.

A highly desirable feature is cloud-based delivery, accessible via an online portal without requiring installation on ATO systems.

The system must support concurrent access by at least seven users initially, with potential expansion to 20 users.

ATO has indicated the contract will commence on 1 July 2025 for an initial 12-month period, with extension options available.