The US Treasury Department has laid out a comprehensive plan to tackle the risks posed by cryptocurrencies and other emerging technologies in its 2024 National Strategy for Combating Terrorist and Other Illicit Financing. The strategy aims to address the evolving threat environment where criminal organizations are increasingly using digital assets for illegal activities such as money laundering, terrorist financing, and cybercrime. By focusing on regulatory gaps, enforcement actions, and international cooperation, the Treasury intends to combat these threats effectively.
The Treasury plans to implement comprehensive regulations for digital assets and virtual asset service providers (VASPs). It will also propose rules to mandate anti-money laundering and countering the financing of terrorism (AML/CFT) programs for investment advisers and increase transparency in non-financial real estate transactions. Additionally, the Treasury will monitor and adapt rules for emerging technologies like DeFi to prevent criminals from exploiting them.
The Treasury emphasized the need to enhance the operational effectiveness of law enforcement and other government agencies. Initiatives include providing robust training, leveraging advanced technologies such as AI and blockchain analytics, and fostering public-private partnerships to share information on illicit activities. International collaboration is also crucial in tackling illicit finance, as the Treasury works with global partners to strengthen AML/CFT standards and disrupt cross-border criminal networks.
Moreover, the Treasury aims to support responsible technological advancements by developing secure digital identity solutions and promoting innovation in AML/CFT compliance technologies within the private sector. By finalizing regulations and addressing vulnerabilities in sectors not currently subject to comprehensive AML/CFT measures, the Treasury hopes to create a more secure financial environment that deters illicit activities and supports legitimate financial innovation.
Despite the Treasury’s efforts to address illicit finance, challenges persist in combatting illicit activity. The increasing sophistication of illicit actors, especially in the virtual asset space, highlights the need for continuous adaptation and innovation in regulatory and enforcement frameworks. The Treasury called for additional resources and legislative support to supervise and enforce compliance among non-bank financial institutions and new market entrants.
The 2024 Strategy reaffirms the US government’s commitment to maintaining a secure and transparent financial system. By addressing the risks associated with digital assets and fostering international collaboration, the Treasury aims to create a resilient environment that deters illicit activities and supports legitimate financial innovation. It is essential to remain vigilant and responsive to new threats to ensure the effectiveness of the AML/CFT regime in both the public and private sectors.
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