The US Treasury Department is taking a proactive approach to address the risks posed by cryptocurrencies and other emerging technologies in the fight against illicit financing. With a focus on comprehensive regulation, the Treasury aims to mitigate the misuse of digital assets by illicit actors while promoting transparency and security in the financial system.
In its 2024 National Strategy for Combating Terrorist and Other Illicit Financing report, the Treasury has identified digital assets as a key area of focus. The strategy outlines a comprehensive approach to combatting criminal organizations that are increasingly using crypto and other digital assets for illegal activities such as money laundering, terrorist financing, and cybercrime. By closing regulatory gaps, enhancing enforcement actions, and strengthening international cooperation, the Treasury aims to effectively combat these threats.
The Treasury plans to implement comprehensive regulations for digital assets and virtual asset service providers (VASPs). This includes proposing rules to mandate anti-money laundering and countering the financing of terrorism (AML/CFT) programs for investment advisers and increasing transparency in non-financed real estate transactions. The Treasury also aims to monitor and adapt rules for emerging technologies like DeFi to prevent criminals from exploiting them.
The Treasury emphasizes the importance of enhancing the operational effectiveness of law enforcement and other government agencies. This includes providing robust training, utilizing advanced technologies like AI and blockchain analytics, and fostering public-private partnerships to share vital information on illicit activities. International collaboration is also a priority for the Treasury, as it works with global partners to strengthen AML/CFT standards and disrupt cross-border criminal networks.
In addition to combatting illicit financing, the Treasury aims to support responsible technological advancements. This includes developing secure digital identity solutions and promoting innovation in AML/CFT compliance technologies within the private sector. By finalizing regulations and addressing vulnerabilities in sectors not currently subject to comprehensive AML/CFT measures, the Treasury seeks to create a resilient environment that deters illicit activities and supports legitimate financial innovation.
Despite significant advancements, the Treasury acknowledges ongoing challenges in combatting illicit activity, particularly in the virtual asset space. To address these challenges, the Treasury calls for additional resources and legislative support to bolster its efforts in supervising and enforcing compliance among non-bank financial institutions and new market entrants. The 2024 Strategy reaffirms the US government’s commitment to maintaining a secure and transparent financial system through proactive measures and international collaboration.