The House Passes the Financial Technology Protection Act Designed to Combat Illicit Activities that Use Fintech Such as Digital Currencies

The House of Representatives passed several bills today and included in the mix was the Financial Technology Protection Act, (H.R. 56). The legislation was introduced by Congressman Stephen Lynch and Congressman Ted Budd and garnered bi-partisan support. The bill establishes an “Independent Financial Technology Task Force” to combat the use of financial technologies, or Fintech, like digital currencies, to fund terrorism.

Congressman McHenry, the ranking member on the House Financial Services Committee, addressed the legislation on the House floor today.

According to the summary of the bill, the legislation would accomplish the following:

  • Provides for the investigation of new financial technologies (e.g., digital currencies) and their use in terrorism and other illicit activities.
  • Establishes the Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing, which must research terrorist and illicit use of new financial technologies and issue an annual report.
  • Directs the Department of the Treasury to provide a reward for a person who provides information leading to the conviction of an individual involved with terrorist use of digital currencies.
  • Establishes the Fintech Leadership in Innovation and Financial Intelligence Program to support the development of tools and programs to detect terrorist and illicit use of digital currencies.

The aforementioned Fintech “Task Force” will mandate the participation of the following federal agencies and other non-governmental representatives:

  • the Secretary of the Treasury, who shall serve as the head of the Task Force;
  • the Attorney General;
  • the Director of National Intelligence;
  • the Director of the Financial Crimes Enforcement Network;
  • the Director of the Secret Service;
  • the Director of the Federal Bureau of Investigation; and
  • 6 individuals appointed by the Secretary of the Treasury, in consultation with the members of the Task Force described under paragraphs (2) through (6), to represent the private sector (including the banking industry, nonprofit groups, and think tanks), with at least 2 of such individuals having experience in the Fintech industry.

There has been growing concern internationally that digital, or virtual currencies, are being utilized for illicit activities via the dark web. Too frequently, ransoms are being demanded to be paid by Bitcoin as it remains fairly easy to launder the crypto using tumbler services that mix good crypto with bad thus obfuscating the tracks of criminals. Lightly regulated crypto exchanges, typically outside the US, allegedly play a role in the laundering process.

The bill now moves over to the Senate for further deliberation.

the Financial Technology Protection Act - BILLS-116hr56ih

You may download the bill here.

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