U.S. Treasury Targets Tighter Crypto Regulations to Combat Money Laundering and Illicit Finance

The U.S. Treasury Department is intensifying its focus on combating money laundering and terrorist financing in the digital asset space as part of its broader initiative to curb illicit financial activities.

On Thursday, the department released its 2024 “National Strategy for Combatting Terrorist and Other Illicit Financing,” detailing its approach to addressing illegal financial activities. The report emphasized ongoing efforts related to cryptocurrencies, including sanctions against exchanges and groups like Bitzlato and Lazarus, the resolution with Binance, and advisories concerning pig butchering schemes. This annual report highlights the Treasury’s perspective on illicit finance and the potential role of cryptocurrency regulations in mitigating these issues.

The strategy document outlined four key priorities: bridging gaps in anti-money laundering (AML) regulations, fostering a more efficient and risk-based framework, enhancing the capabilities of law enforcement agencies, and leveraging technological advancements.

The document mentioned that updating current supervisory frameworks for cryptocurrencies would support these priorities.

This encompasses possible revisions to the U.S. regulatory framework for AML and countering terrorism financing (CFT), as well as promoting the global implementation of Financial Action Task Force (FATF) standards, according to the document.

“Effectively applying the existing AML/CFT supervisory and enforcement framework to virtual asset activities necessitates that the United States devote sufficient supervisory and enforcement resources and continue to invest in technology and training for analysts, investigators, and regulators to enhance their expertise in new technologies, including the analysis of public blockchain data,” the document stated.

During a press call, a Treasury official noted that Deputy Treasury Secretary Wally Adeyemo and Under Secretary for Terrorism and Financial Intelligence Brian Nelson have been discussing the department’s need for increased authority and oversight over certain crypto matters with lawmakers.

“We will continue collaborating with Congress to provide technical assistance on these proposals, and securing these authorities remains a leadership priority within the department,” the official said.

The report also indicated that the Treasury would persist in monitoring the evolution of digital asset payments, including decentralized finance (DeFi), offering technical assistance to Congress, reassessing its use of sanctions, and seeking additional funding for the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC).