Treasury Seeks New Sanctions Tools

The Administration is calling on Congress to give it additional tools to prevent terrorist groups and other malign actors from using crypto-currencies to circumvent US sanctions.

Treasury Deputy Secretary Wally Adeyemo told the Senate Banking Committee last week that the Administration needs “additional tools to protect the American people.”

Treasury is suggesting Congress strengthen counter-terrorist financing authorities. “While we have had some success in rooting out illicit finance in the digital asset ecosystem, we need to build an oversight and enforcement regime that is capable of preventing this activity as more terrorists, transnational criminals, and rogue states turn to digital assets.”

Mr. Adeyemo said he has sent the committee three options for legislation:

• The first is the introduction of a secondary sanctions tool targeted at foreign digital asset providers that facilitate illicit finance.
• The second reform is centered on modernizing and closing gaps in existing authorities by expanding their reach to explicitly cover the key players and core activities of the digital assets ecosystem.
• Finally, a third reform addresses jurisdictional risk from offshore cryptocurrency platforms, which is a key challenge.

“We agree that the use of these emerging technologies by illicit actors can have impacts on the national security, foreign policy, and economy of the United States,” he told the committee.

“That’s why the United States has a strong interest in ensuring that we have the necessary tools and authorities available and are ready to mitigate the risks in this quickly evolving ecosystem, including for dollar-based digital assets in particular.”

While 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,” he said.