Treasury Seeks More Authority To Crack Down On Crypto Crime

A top Treasury official has asked Congress for more power to pursue criminals who use crypto assets for illicit purposes. The official will testify before a House committee on Feb. 15.

The Under Secretary for Terrorism and Financial Intelligence at the Treasury Department, Brian Nelson, has expressed his concerns about crypto in illicit finance in a statement to the House Financial Services Committee. He will appear before the committee on Feb. 15 for a hearing on terrorism and cryptocurrency crimes.

Nelson’s statement comes amid growing scrutiny from Washington lawmakers, including Senator Elizabeth Warren, who has been advocating for her Anti-Money Laundering bill. The bill, known as the Digital Asset Anti-Money Laundering Act (DAAMLA), was reintroduced to the U.S. Senate in July 2023. It aims to prevent and punish the use of crypto assets for money laundering and financing terrorism.

Nelson said in his statement that the Treasury has been working for the past decade on a framework to combat the financing of terrorism that “mitigates illicit finance risks while promoting responsible innovation”. He added that the Treasury has some tools to address certain issues, such as holding accountable firms that violate the Bank Secrecy Act, which requires financial institutions to report and prevent money laundering and other financial crimes.

Nelson stated:

“[…] to root out illicit finance by players in virtual asset markets and forums, we need additional tools and resources. That is why we are eager to work with Congress to adopt common-sense reforms that update our tools and authorities to match the evolving challenges we face today.”

Treasury’s Crypto Oversight Proposals

In 2023, the Treasury Department proposed some ideas to lawmakers to expand its powers, such as introducing new sanctions tools to target wrongdoers in the crypto space. The Treasury also stressed the need for more oversight of stablecoins, although this was not explicitly mentioned in Nelson’s statement.

Nelson’s remarks follow the recent release of the Treasury’s 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing. These assessments identified threats and risks related to illicit finance in the U.S., including the crypto sector. The reports noted that while cash is still the main medium for drug laundering, there is an increasing trend of bad actors using virtual assets.

Moreover, the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology and Inclusion will hold a hearing on Feb. 15, focusing on cryptocurrency and illicit activities.

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