U.S. Treasury Undersecretary Adewale O. Adeyemo has urged Congress to take action to provide the government with the “necessary tools” to root out illicit finance involving cryptocurrencies.
Adeyemo said in his writing that terrorist groups have been trying to exploit cryptocurrencies for the past few years. confession for a Senate Banking, Housing and Urban Affairs Committee hearing scheduled for Tuesday.
“For example, five years ago, Al Qaeda and related terrorist groups, primarily based in Syria, operated a Bitcoin money laundering network using social media platforms to solicit cryptocurrency donations,” he noted. I did.
Adeyemo went on to say that one of the agency’s bottlenecks lies in the fact that malicious actors are “increasingly looking for ways to use virtual currencies to hide their identities and move resources.”
Using existing approaches to combat terrorist financing through traditional financial systems, the agency has effectively made it more difficult for terrorist groups to move their funds. But “the more effective our targets are, the more reason terrorist groups have to probe virtual assets,” Adeyemo said.
He also added that Russia is increasingly turning to alternative payment mechanisms, including stablecoins, “to circumvent our sanctions and continue to fund its war machine.”
In December, a bipartisan group of U.S. senators submitted a bill This would expand the Treasury Department’s sanctions authority to cover more terrorist groups, including Hamas, and give them more resources to address cryptocurrency issues.
The proposal includes three reforms:
Adeyemo noted that the Treasury had sent a proposal to the committee in November to strengthen the government’s counter-terrorism financing powers.
In his testimony, he explained that the proposals generally address three reforms: introducing secondary sanctions tools, addressing gaps and modernizing existing authorities, and addressing jurisdictional risks for foreign cryptocurrency platforms.
Currently, the Treasury Department has the authority to bar US correspondents from processing accounts and transactions for foreign financial institutions with suspicious activity. “However, unlike banks, foreign cryptocurrency exchanges and some financial services companies do not hold or rely on trading accounts for all transactions,” Adeyemo said. The new secondary sanctions tool will help the Treasury advance its targeting capabilities, he added.
“While we continue to assess terrorists’ preference for traditional financial products and services, we have concerns that the use of virtual assets by these actors will continue to grow without action from Congress to provide the necessary tools,” he continued.
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