Digital Asset Anti-Money Laundering Act Closes Loopholes and Combats Money Laundering, Ransomware Attacks, Sanctions Evasion, Drug Trafficking
Denver — Colorado U.S. Senator Michael Bennet joined U.S. Senators Elizabeth Warren (D-Mass.), Roger Marshall (R-Kan.), Joe Manchin (D-W.Va.), and Lindsey Graham (R-S.C.) to cosponsor the Digital Asset Anti-Money Laundering Act. This legislation would mitigate the illicit finance risks cryptocurrency poses by closing loopholes and bringing the digital asset ecosystem into greater compliance with existing rules countering money laundering and terrorist financing.
“Cryptocurrency can be a boon for cybercriminals, cartels, and terrorist organizations, allowing them to evade sanctions and finance illicit ventures. We cannot allow crimes like money laundering to evade scrutiny simply because they take place on the blockchain instead of with dollar bills. It's time we extend our common-sense safeguards to digital assets,” said Bennet.
“Crypto is enabling rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks,” said Warren. “Our expanding coalition shows that Congress is ready to take action – our bipartisan bill is the toughest proposal on the table cracking down on crypto’s illicit use and giving regulators more tools in their toolbox.”
“I am thrilled to see my colleagues on both sides of the aisle join this commonsense legislation to protect Americans and prevent bad actors from using cryptocurrencies to finance their criminal activities,” said Manchin. “Our bipartisan bill would help fight back against terrorist organizations and rogue state actors, such as Russia and North Korea, who use crypto to bankroll illicit activities and require cryptocurrency platforms to abide by the same anti-money-laundering rules that banks follow. It’s time to bring the Digital Asset Anti-Money Laundering Act to the Senate floor as a matter of national security.”
“All too often crypto is used to move illicit funds for drug cartels, criminal gangs, terrorist groups and kidnappers,” said Graham. “ Our legislation will help create transparency and provide oversight in an industry that in many cases helps facilitate criminal activity. When it comes to transparency and legality, many of the same rules that apply to the dollar should exist for crypto.”
The Treasury Department, U.S. Department of Justice, and other national security and financial crime experts warn that digital assets are increasingly used for money laundering, drug trafficking, ransomware attacks, theft and fraud schemes, terrorist financing, and other crimes. Rogue nations like Iran, Russia, and North Korea use digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. Nearly half of North Korea’s missile program, for example, is estimated to be funded by cybercrime and digital assets. In 2022, illicit digital asset transactions totaled at least $20 billion – an all-time high.
The Digital Asset Anti-Money Laundering Act would:
Extend Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer requirements, to digital asset wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions.
Address a major gap with respect to “unhosted” digital wallets – which allow individuals to bypass AML and sanctions checks – by directing FinCEN to finalize and implement its December 2020 proposed rule, which would require banks and money service businesses (MSBs) to verify customer and counterparty identities, keep records, and file reports in relation to certain digital asset transactions involving unhosted wallets or wallets hosted in non-BSA compliant jurisdictions.
Direct FinCEN to issue guidance to financial institutions on mitigating the risks of handling, using, or transacting with digital assets that have been anonymized using digital asset mixers and other anonymity-enhancing technologies.
Strengthen enforcement of BSA compliance by directing the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs and other digital asset entities with BSA obligations and directing the Securities and Exchange Commission and Commodity Futures Trading Commission to establish AML/CFT compliance examination and review processes for the entities they regulate.
Extend BSA rules regarding reporting of foreign bank accounts to include digital assets by requiring United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service.
Mitigate the illicit finance risks of digital asset ATMs by directing FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of the kiosks they own or operate and verify customer and counterparty identity.
“BPI supports bipartisan efforts to help crack down on money laundering and believes this measure is an important step in that direction,” said the Bank Policy Institute. “The existing anti-money laundering and Bank Secrecy Act framework must account for digital assets, and we look forward to engaging in this process to defend our nation’s financial system against illicit finance in all its forms.”
This legislation is supported by the Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs’ Association, AARP, National Consumer Law Center (on behalf of its low-income clients), and National Consumers League.
In addition to Bennet, Warren, Marshall, Manchin, and Graham, this legislation is cosponsored by U.S. Senators Gary Peters (D-Mich.), Dick Durbin (D-Ill.), Tina Smith (D-Minn.), Angus King (I-Maine), Jeanne Shaheen (D-N.H.), Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), and Catherine Cortez Masto (D-Nev.).The text of the bill is available HERE.