The US Treasury Department is set to prioritize addressing the risks posed by cryptocurrencies and emerging technologies in the near future through the implementation of comprehensive regulations. The department’s 2024 National Strategy for Combating Terrorist and Other Illicit Financing report includes digital assets as a key focus area. The strategy aims to combat the misuse of these technologies by illicit actors while also promoting transparency and security within the financial system.
Combatting Criminal Activities and Enhancing Enforcement
With criminal organizations increasingly turning to cryptocurrencies and other digital assets to facilitate illegal activities such as money laundering, terrorist financing, and cybercrime, the 2024 Strategy is designed to close regulatory gaps, strengthen enforcement actions, and improve international cooperation in combating these threats effectively. The Treasury plans to introduce comprehensive regulations for digital assets and virtual asset service providers (VASPs) to combat illicit activities.
In addition to regulating digital assets, the Treasury will propose rules mandating anti-money laundering and countering the financing of terrorism (AML/CFT) programs for investment advisers and increasing transparency in non-financed real estate transactions. It also aims to monitor and adapt regulations for emerging technologies such as DeFi to prevent criminals from exploiting them. Enhancing the operational effectiveness of law enforcement and government agencies remains a crucial aspect of the strategy.
The Treasury emphasizes the importance of international collaboration in tackling illicit finance, working with global partners to strengthen AML/CFT standards and share intelligence to disrupt cross-border criminal networks. Additionally, the department aims to support responsible technological advancements, advocating for secure digital identity solutions and innovation in AML/CFT compliance technologies within the private sector. The focus is on finalizing regulations and addressing vulnerabilities in sectors not currently subject to comprehensive AML/CFT measures.
Challenges and Ongoing Efforts in Combating Illicit Activity
While significant advancements have been made in combatting illicit activities, the Treasury acknowledges ongoing challenges, particularly in combating the increasing sophistication of illicit actors in the virtual asset space. Continuous adaptation and innovation in regulatory and enforcement frameworks are deemed necessary to address these challenges. The Treasury calls for additional resources and legislative support to strengthen supervision and enforcement compliance among non-bank financial institutions and new market entrants.
Maintaining a Secure and Transparent Financial System
The 2024 Strategy underscores the US government’s commitment to maintaining a secure and transparent financial system by addressing risks associated with digital assets and promoting international collaboration. Through these initiatives, the Treasury aims to create a resilient environment that deters illicit activities and fosters legitimate financial innovation. By remaining vigilant and responsive to new threats, the ongoing modernization of the AML/CFT regime ensures that both the public and private sectors can effectively address the most significant illicit finance risks.