The U.S. Treasury Department Reveals Increase in Illicit Crypto Use
The U.S. Treasury Department has released its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing report, which highlights a rise in the use of virtual assets for illicit activities. While cash-based transfers remain the primary method, the report notes that virtual assets are increasingly being used by illicit actors to launder drug trafficking proceeds.
Terrorist Organizations Turn to Virtual Assets
The report also reveals that terrorist organizations like Hamas and ISIS-K have been experimenting with different types of virtual assets. These groups have turned to stablecoins due to their reduced volatility as a way to mitigate financial risks associated with price fluctuations. However, the report states that terrorists still prefer traditional financial products and services.
Efforts to Combat Illicit Crypto Activities
The release of the report comes after the U.S. Deputy Treasury Secretary, Wally Adeyemo, warned illicit actors in the crypto industry about potential action against them. Adeyemo emphasized responsible innovation but made it clear that action would be taken against those involved in illicit activities. Congressional discussions on the illicit use of cryptocurrencies have also gained momentum following questions about Hamas’ use of digital assets.
Treasury’s Commitment to Protecting Financial Systems
Brian E. Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence, highlighted that illicit finance is a common thread across major national security threats. He stated that the Treasury Department plays a crucial role in analyzing global risk environments to safeguard financial systems from abuse by illicit actors. The department is set to release its 2024 National Strategy for Combating Terrorist and Other Illicit Finance in the coming weeks.
Hot Take: Rising Illicit Virtual Asset Use
The U.S. Treasury Department’s report reveals a concerning increase in the use of virtual assets for illicit purposes. While cash-based transfers remain prevalent, virtual assets are being utilized by illicit actors, including terrorist organizations, to launder drug trafficking proceeds. Stablecoins have become attractive to these groups due to their reduced volatility. However, traditional financial products and services are still preferred by terrorists. The Treasury Department is actively working to combat illicit crypto activities and protect global financial systems. The forthcoming National Strategy for Combating Terrorist and Other Illicit Finance will provide further guidance on addressing these issues.
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