A US Treasury official calls on Congress to put in place the “necessary tools” to combat illicit financing linked to cryptocurrencies.

U.S. Deputy Treasury Secretary Adewale O. Adeyemo has urged Congress to take action to provide the government with the “necessary tools” to combat illicit financing linked to cryptocurrencies.

Adeyemo said terrorist groups have attempted to profit from cryptocurrencies in recent years, according to his writing. testimony for the hearing of the Senate Committee on Banking, Housing and Urban Affairs scheduled for Tuesday.

“For example, five years ago, Al-Qaeda and affiliated terrorist groups, largely based in Syria, operated a Bitcoin money laundering network using social media platforms to solicit cryptocurrency donations,” he noted.

Adeyemo added that one of the agency’s bottlenecks is that bad actors are “increasingly finding ways to hide their identities and move resources using virtual currency.”

Using existing approaches to combating terrorist financing through the traditional financial system, the agency has effectively made it more difficult for terrorist groups to move money. However, “the more effective our targeting has been, the more reason these terrorist groups have to look into virtual assets,” Adeyemo said.

He added that Russia is also increasingly turning to alternative payment mechanisms, including stablecoins, to “attempt to circumvent our sanctions and continue to finance its war machine.”

In December, a group of bipartisan U.S. senators presented a bill It would expand Treasury’s sanctions powers to cover more terrorist groups, including Hamas, and give them more resources to fight crypto.

The proposals include three reforms

Adeyemo noted that the Treasury had sent proposals to the Committee in November in the hope of strengthening government authorities to combat terrorism financing.

He explained in his testimony that the proposals generally covered three reforms: introducing a secondary sanctions tool, modernizing and closing gaps in existing authorities, and managing jurisdictional risk related to offshore crypto platforms.

Currently, the Treasury has the authority to ban U.S. correspondent accounts and transaction processing from foreign financial institutions with suspicious activity. “But unlike banks, foreign cryptocurrency exchanges and some money services businesses do not have or rely on correspondent accounts for all their transactions,” Adeyemo said, adding that a new sanctions tool secondary would help the Treasury to develop its targeting capabilities. .

“As we continue to assess that terrorists prefer to use traditional financial products and services, we are concerned that without Congressional action to provide us with the necessary tools, the use of virtual assets by these actors will only increase” , he continued.

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