Treasury Asks Congress for More Sanctions Authorities to Target Crypto Financing
The Treasury Department has asked lawmakers to approve a series of proposals to help it counter terrorist groups and other bad actors that increasingly use cryptocurrency to evade financial sanctions, Deputy Treasury Secretary Wally Adeyemo said April 9.
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The proposals, which Treasury sent to Congress in November, would give the department additional sanctions tools to go after foreign digital asset providers that facilitate illicit finance, Adeyemo told the Senate Banking Committee. They would also extend existing authorities to cryptocurrency exchanges, and would clarify that such authorities can apply outside of U.S. territory for national security reasons.
"Our problem is that actors are increasingly finding ways to hide their identities and move resources using virtual currency," Adeyemo testified. "While we continue to assess that terrorists prefer to use traditional financial products and services, we fear that without congressional action to provide us with the necessary tools, the use of virtual assets by these actors will only grow."
Among the recent users of digital money is Iran’s Islamic Revolutionary Guard Corps-Quds Force, which transferred cryptocurrency to Hamas and the Palestinian Islamic Jihad in Gaza over the past year, Adeyemo said. The problematic proliferation of such assets is not limited to terrorist groups and includes such state actors as North Korea and Russia. Russia, for example, uses the stablecoin Tether to circumvent sanctions and finance its war on Ukraine.
While Senate Banking Committee Chairman Sen. Sherrod Brown, D-Ohio, said he wants to work with Treasury on its proposals, ranking member Sen. Tim Scott, R-S.C., accused the Biden administration of using cryptocurrency as a “scapegoat.” He said the administration’s waiver of Iran energy sanctions (see 2404040044) has given Tehran access to billions of dollars in cash, not cryptocurrency.
“Having a conversation simply and exclusively about digital assets misses the elephant in the room,” Scott said.
Adeyemo noted that lawmakers have put forth cryptocurrency proposals of their own. Sens. Thom Tillis, R-N.C., and Bill Hagerty, R-Tenn., on April 8 released a discussion draft of a bill that would, among other things, “clarify Treasury’s authority to use a powerful illicit finance policy tool against transactions and financial institutions associated with digital asset money laundering,” Tillis’ office said.
A bipartisan group of four senators introduced a bill in December that would impose sanctions on foreign cryptocurrency firms, as well as foreign banks, that do business with terrorist organizations such as Hamas (see 2312080072).
If Treasury is given the additional authorities, it will need more employees and technology to implement them, Adeyemo said.
Also during the hearing, Adeyemo said Treasury has sanctioned Iran’s top steel producers but “must do more” to cut off Iran’s illegal sales of steel. Treasury is working with the U.S. intelligence community to find out how Iran is conducting those transactions. “What you should expect is we’re going to continue to take actions there,” he testified.