The United States Treasury Department Targets Cryptocurrency Mixing for Money Laundering Concerns
The United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed designating cryptocurrency mixing as an area of “primary money laundering concern” in response to Hamas’ attack on Israel. FinCEN stated that the percentage of convertible virtual currency (CVC) transactions processed by CVC mixers originating from likely illicit sources is increasing.
FinCEN is suggesting that domestic financial institutions and agencies implement specific recordkeeping and reporting requirements for transactions involving crypto mixers. The department initially considered a narrower approach focused on terror finance involving Hamas, ISIS, and North Korea-sponsored actors. However, it concluded that such an approach would not adequately address the associated risks.
Cracking Down on Crypto Exploitation by State-Affiliated Actors
Deputy Treasury Secretary Wally Adeyemo explained that the U.S. government’s move to sanction crypto mixers aims to combat the exploitation of digital assets by state-affiliated cyber actors, cybercriminals, and terrorist groups. He cited instances of Hamas and the Palestinian Islamic Jihad using cryptocurrencies illicitly, referring to their recent attacks on Israel.
This action from the Treasury Department follows concerns raised by U.S. lawmakers regarding terrorist organizations financing their activities through cryptocurrencies. Over 100 members of Congress urged President Joe Biden’s administration to take swift action against illicit crypto activity. Additionally, on October 18, the Treasury officials added a Gaza-based crypto operator allegedly linked to Hamas to its list of Specially Designated Nationals.
Hot Take: Combating Money Laundering in Crypto Transactions
The proposal by FinCEN to designate cryptocurrency mixing as an area of primary money laundering concern demonstrates the United States’ commitment to cracking down on illicit activities in the crypto space. By imposing stricter recordkeeping and reporting requirements for transactions involving crypto mixers, the government aims to prevent the exploitation of digital assets by state-affiliated actors, cybercriminals, and terrorist groups.
With increasing concerns about the financing of terrorism through cryptocurrencies, it is crucial for regulators to stay vigilant and take proactive measures to ensure the integrity of the financial system. By addressing these risks head-on, the United States aims to protect its citizens and maintain the security of the global financial landscape.
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