The US Treasury Department’s Office of Terrorism & Financial Intelligence (TFI) wants enhanced tools and authorities to combat illicit fund movements facilitated by crypto. TFI Under Secretary Brian Nelson presented this request in a prepared Feb. 14 statement to the House Financial Services Committee.
Nelson expressed deep concern regarding the use of virtual assets in illicit financial activities. According to him, the Treasury Department has developed an anti-money laundering framework to address terrorism financing while promoting responsible innovation.
Despite these efforts, Nelson argued that threat actors such as ransomware cybercriminals, scammers, and terrorist groups exploit vulnerabilities such as jurisdictional arbitrage and non-compliant financial institutions to profit from illicit activities using virtual assets.
To tackle these vulnerabilities, the Treasury is implementing new tools. These include efforts to reduce the anonymity associated with digital asset mixers and holding non-compliant firms accountable under the Bank Secrecy Act and sanctions regulations. Nelson said,
“This action seeks to increase transparency in the virtual asset ecosystem and assist U.S. government efforts to mitigate these illicit finance risks by requiring covered financial institutions to report on transactions involving mixing.”
Despite these measures, the official highlighted the need for “additional tools and resources” to “root out illicit finance by players in virtual asset markets and forums.”
“That is why we are eager to work with Congress to adopt common-sense reforms that update our tools and authorities to match the evolving challenges we face today.”
Last year, Treasury Department Deputy Secretary Wally Adeyemo emphasized the need for enhanced sanctions and authorities to strengthen efforts against illicit actors.
This statement follows recent scrutiny of virtual assets used in illicit activities, particularly in conflict regions like Israel/Palestine and Russia/Ukraine. Some critics, including Senator Elizabeth Warren, allege that the emerging industry significantly facilitates terrorism financing and money laundering.
However, major crypto stakeholders such as Coinbase, Binance, and Elliptic refute these claims, asserting that blockchain technology offers numerous benefits that can be used to safeguard the broader financial system.
