U.S. Treasury Deputy Secretary Adewale O. Adeyemo has stressed the need to build an enforcement regime to combat crypto-linked illicit finance. Adeyemo also urged the Congress to provide the “necessary tools” to the agency so that it can fight the menace.
Deputy Secretary made these remarks in his written testimony for the latest Senate Banking, Housing and Urban Affairs Committee Hearing. Adeyemo underlined the instances of several terrorist organisations operating crypto laundering schemes on social media to fund their operations. These entities use the pseudonymous nature of the crypto ecosystem to obscure their identities and funds.
Since it has become difficult for terror organisations to operate through traditional finance channels, they are increasingly turning to cryptocurrency to run their operations. For this purpose, the Treasury wants to establish an enforcement regime. Adeyemo also reminded that in November, the Treasury sent proposals to the Committee. The three main reforms that were suggested are:
1. Introducing a secondary sanctions tool targeted at foreign digital asset providers engaged in illicit finance,
2. Modernising and closing gaps in existing authorities by expanding their reach, and
3. Addressing jurisdictional risk from offshore crypto platforms.
Adeyemo remarked,
"While we have had some success in rooting out illicit finance in the digital asset ecosystem, we need to build an enforcement regime that is capable of preventing this activity as more terrorists, transnational criminals, and rogue states turn to digital assets."
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