- The U.S. Treasury has concerns about illicit finance flow in the crypto industry.
- The department is set to address the matter before Congress.
- A prepared testimony spotlights the Treasury’s areas of focus.
The U.S. Treasury Department’s Office of Terrorism & Financial Intelligence is preparing to address Congress on several issues, including crypto ’s risks to existing financial regulatory frameworks.
The scheduled address follows the Treasury’s 2024 National Risk Assessment report on February 7, highlighting the prevalence of cryptocurrencies and decentralized finance (DeFi) in money laundering and terrorism financing.
Focus on Crypto’s Role in Illicit Activities
In his prepared testimony , Treasury’s Under Secretary for Terrorism and Financial Intelligence Brian Nelson gave a snippet of the government’s concerns regarding the use of digital assets in illicit financial activities.
“While we continue to assess that terrorists’ use of digital assets remains a small fraction of more established mechanisms to move money, we recognize that terrorist groups have and may continue to turn to digital assets to raise, transfer, and store their illicit proceeds,” Nelson wrote.As a response to these risks, Nelson revealed that the Treasury has been “working for over a decade” on implementing a robust AML/CFT framework that mitigates activities by bad actors while fostering responsible innovation.
Nelson further stated that the department had “tools to address some of these vulnerabilities,” such as using its authorities to hold accountable firms that violate their Bank Secrecy Act and sanctions obligations.
“For example, in November, Treasury reached historic settlements for BSA and sanctions violations with the largest virtual asset service provider in the world, Binance,” Nelson remarked.While the testimony acknowledged the effectiveness of these tools in disrupting illicit finance flow in the crypto industry, “sometimes in novel ways,” Nelson stated that the Treasury needed more tools and resources to address the issue effectively.
Specifically, he urged Congress to “adopt common-sense reforms” that give the Treasury amplified tools and authorities to match the evolving challenges of crypto.
Read why the U.S. Treasury is lobbying for more authority in crypto crackdown:
U.S. Treasury Lobbies for More Authority in Crypto Crackdown
Stay updated on Tornado Cash’s case with the Treasury:
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