Key takeaways:
- In testimony before the Senate Banking Committee, US Deputy Treasury Secretary Adewale Adeyemo persisted in calling for increased enforcement authority for his organization.
- Secondary sanctions were to be implemented against “foreign digital asset providers” who participated in illegal funding.
In testimony before the Senate Banking Committee on April 9, United States Deputy Treasury Secretary Adewale Adeyemo persisted in calling for increased enforcement authority for his organization.
Adeyemo presented three changes to enhance US enforcement actions against foreign criminal organizations employing cryptocurrency during a hearing on combating illicit money, terrorism, and sanctions evasion. Adeyemo was investigating recommendations that the Treasury Department had issued in November.
In his most recent testimony, Adeyemo enumerated three improvements the agency was seeking. Secondary sanctions were to be implemented against “foreign digital asset providers” who participated in illegal funding.
Adeyemo stated that although US sanctions forbid organizations from using US correspondent accounts or processing transactions through banks, cryptocurrency exchanges and money services are not always dependent on correspondent account usage.
“We can clarify that our authorities can reach extraterritorially when digital asset entities harm our national security while taking advantage of our financial system.”
The second change that the Treasury pursues would give “existing authorities” more authority over the digital asset sector. According to Adeyemo, it tackles jurisdictional risk from offshore cryptocurrency platforms. The final point was dubbed a “key challenge” by him. He stated:
“There is clear overlap between these proposals and the bills coming out of this Committee.”
Adeyemo was making reference, at least partially, to the Digital Asset Anti-Money Laundering Act of 2022, which Sherrod Brown, the chair of the committee, and Elizabeth Warren reintroduced in the current Congress. Notable crypto skeptics are both writers.
Adeyemo cited the necessity for the Treasury to have more enforcement authority due to the usage of cryptocurrency by terrorist organizations, North Korea, and the fentanyl trade.
He acknowledged that they still believe that terrorists would rather use conventional financial services and products, but he issued a warning: they think that the use of virtual assets by these actors will only increase if Congress does not take action to give them the resources they need.
Prior to Adeyemo’s hearing, Sherrod Brown, the chair of the Banking Committee, issued a statement endorsing the Treasury Department’s enforcement objectives. Tim Scott, the ranking member, acknowledged the Department’s efforts but focused mostly on foreign policy matters that he felt threatened US security.
