Yesterday, Deputy Secretary of the Treasury Wally Adeyemo testified before the Senate Banking Committee. In prepared testimony, Adeyemo called out digital assets—or crypto—and stated that bad actors are using these assets for nefarious activities.
Adeymo said:
“As we take steps to cut terrorist groups and other malign actors off from the traditional financial system, we are concerned about the ways these actors are using cryptocurrencies to try and circumvent our sanctions.
For example, five years ago, al-Qaeda and affiliated terrorist groups, largely based out of Syria, operated a Bitcoin money laundering network using social media platforms to solicit cryptocurrency donations. After receiving virtual currency, they laundered the proceeds through various online gift card exchanges to be able to purchase what they needed to advance their violent agenda.”
Adeyemo added that Hamas, the Iranian Quds Force, and Islamic Jihad have all used crypto to solicit small donations.
Other criminal groups leveraging crypto include Russian oligarchs, North Korea, etc.
Treasury has asked Congress to update regulations to enable them to pursue these bad actors. Adeyemo outlined the following requests:
- The first is the introduction of a secondary sanctions tool targeted at foreign digital asset providers that facilitate illicit finance.
- The second reform is centered on modernizing and closing gaps in existing authorities by expanding their reach to explicitly cover the key players and core activities of the digital assets ecosystem.
- Finally, a third reform addresses jurisdictional risk from offshore cryptocurrency platforms, which is a key challenge.
Adeyemo acknowledges that traditional methods of money laundering, terrorist financing, and other illicit activities dominate the landscape, but Treasury is concerned about the possible rise of crypto as an enabler for illegal objectives.
While crypto is relatively easily traced due to open ledgers, Treasury seeks more power to pursue individuals and groups that are deemed to have transgressed the law or harmed US interests.
