U.S. Sens. Elizabeth Warren (D-MA) and Roger Marshall (R-KS) introduced legislation that seeks to mitigate the risks that cryptocurrency and other digital assets pose to the country’s national security.
Specifically, the Digital Asset Anti-Money Laundering Act of 2022 would close loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework while bringing the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
“Rogue nations, oligarchs, drug lords, and human traffickers are using digital assets to launder billions in stolen funds, evade sanctions, and finance terrorism,” Warren said. “The crypto industry should follow common-sense rules like banks, brokers, and Western Union, and this legislation would ensure the same standards apply across similar financial transactions. The bipartisan bill will help close crypto money laundering loopholes and strengthen enforcement to better safeguard U.S. national security.”
National security and financial crime experts have warned that digital assets are increasingly being used for money laundering, theft and fraud schemes, terrorist financing, and other crimes. Rogue nations like Iran, Russia, and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. In 2021, cybercriminals raked in at least $14 billion in digital assets.
“Following the September 11, 2001, terrorist attacks, our government enacted meaningful reforms that helped the banks cut off bad actors’ from America’s financial system. Applying these similar policies to cryptocurrency exchanges will prevent digital assets from being abused to finance illegal activities without limiting law-abiding American citizens’ access,” Marshal said. “Our common-sense bill will make it harder for criminals to finance their criminal activities, like the trafficking of illicit fentanyl through the dark web, that can harm innocent Kansans.”
The Digital Asset Anti-Money Laundering Act would extend the Bank Secrecy Act (BSA) responsibilities to digital asset wallet providers; direct FinCEN to implement its proposed rule that would require banks and MSBs to verify customer and counterparty identities in relation to unhosted wallets; prohibit financial institutions from transacting with digital asset mixers and other anonymity-enhancing technologies; direct the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs; extend BSA rules regarding reporting of foreign bank accounts to include digital assets, and direct FinCEN to ensure that digital asset ATM owners and administrators regularly update the physical addresses of the kiosks they own or operate and verify customer identity.