US Treasury Official Request More Authority to Combat Crypto Crime

Jimmy Aki
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Brian Nelson, a U.S. Treasury official, has voiced concerns regarding the role of cryptocurrency in facilitating illicit financial activities.

He intends to delineate the agency’s worries to members of the House and advocate for increased authority to combat nefarious actors. This stance is outlined in his prepared testimony scheduled for presentation during a congressional hearing on February 15th.

U.S. Treasury To Address Crypto’s Illicit Finance Risks In Upcoming Hearing

Amid the expansion of the digital finance ecosystem, cryptocurrencies have emerged as both a disruptive force and a breeding ground for illicit activities. As a result, regulatory bodies globally are reassessing the digital asset’s oversight.

For instance, on February 7th, the US Department of the Treasury issued a press release announcing the issuance of its 2024 National Risk Assessments.

In the report, the Treasury described the changing landscape of illicit finance. The focus was on the rising concerns surrounding the digital economy, notably using virtual assets for unlawful purposes.

The major concerns include money laundering, terrorist financing, and proliferation financing.

Additionally, the reports examined how threats to global peace and security, like the war in Ukraine and Hamas’s terrorist attacks in Israel on October 7, 2023, have impacted the illicit finance risk environment within the United States.

In response to these increasing threats, U.S. Treasury Under Secretary Brian Nelson is seeking expanded powers to combat illicit finance activities related to cryptocurrency.

Nelson reiterated this plea in his prepared statement for a congressional hearing on terrorism and cryptocurrency crimes before the House Financial Services Committee.

He emphasized the Treasury’s decade-long efforts to develop a framework for combating terrorism financing while fostering responsible innovation.

Nelson further noted that the Treasury possesses tools to address certain issues, such as the authority to hold non-compliant firms accountable under the Bank Secrecy Act.

However, the undersecretary contends that additional tools and resources are necessary to tackle illicit finance effectively within virtual asset markets.

As a result, there needs to be collaboration with Congress on enacting sensible reforms that align with the evolving challenges of today.

The Subcommittee on Digital Assets, Financial Technology, and Inclusion of the House Financial Services Committee is scheduled to conduct the hearing on February 15th.

The hearing will specifically focus on cryptocurrency and its association with illicit activities.

Cash Trumps Above Crypto For Illicit Activities

In recent years, the rise of cryptocurrencies has sparked debates and concerns about their potential role in facilitating illicit activities, particularly money laundering.

However, a recent statement from the US Treasury suggests that using cryptocurrencies for money laundering purposes is considerably lower than that of traditional cash.

Three different reports explore money laundering, terrorist financing, and proliferation financing. They specifically shed light on how criminal entities acquire, launder, and transfer funds domestically and internationally.

A key observation from the reports emphasized criminals’ and transnational criminal groups’ persistent use of cash.

Meanwhile, the Treasury highlights anonymity, stability, and widespread acceptance of cash as key factors in its continued preference for laundering illicit gains.

For instance 2023, the Treasury conducted 1,480 seizures of currency and monetary instruments, amounting to $18 million in inbound fund movements. On the other hand, there were 1,010 outbound seizures totaling around $53 million.

Conclusively, the Treasury acknowledged that money laundering through virtual assets remains lower than that of fiat currency and traditional methods.

Nonetheless, cryptocurrencies continue to be exploited in instances of ransomware, scams, drug trafficking, human trafficking, and other illegal endeavors.

Therefore, regulatory vigilance, technological innovation, and international cooperation remain critical in addressing emerging challenges. This is to ensure the integrity of the global financial system in the digital age.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.