In its 2024 National Risk Assessments on Money Laundering, the U.S. Department of the Treasury has unveiled the concerning trend of criminals increasingly turning to cryptocurrencies to finance illegal activities.
US Treasury Reports Identify Crypto’s Role in Illicit Finance
The U.S. Department of the Treasury announced in a press release that it has issued its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing. The three reports identify key illicit finance threats, vulnerabilities, and risks, including a focus on the misuse of cryptocurrencies.
In the reports, the Treasury described the evolving landscape of illicit finance, a part of which is the growing concerns surrounding the digital economy, particularly the use of virtual assets in illegal activities. According to the reports, there has been a shift towards cryptocurrencies by criminals for money laundering, with drug trafficking, human smuggling, and corruption being financed through both traditional and digital means.
“Whether it’s terrorism, drug trafficking, Russian aggression, or corruption, illicit finance is the common thread across our nation’s biggest national security threats,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.
As an example of the adaptability of criminals, the Treasury detailed the increased use of virtual assets to move and conceal illicit proceeds. The reports reveal a trend of non-compliance among Virtual Asset Service Providers (VASPs), with many either claiming exemption from regulatory rules or failing to adequately register, thus posing challenges to U.S. law enforcement efforts.
Read More: US Lawmakers Urge Yellen on Crypto Oversight
The assessments also pointed out the strategic utilization of stablecoins by terrorist groups, a finding corroborated by other reports, such as one by Chainalysis. This shift is another example of the continuous evolution of terrorist financing methods in response to technological advancements.
The Treasury’s findings on the misuse of digital platforms extend to the online gaming industry, now identified as a burgeoning venue for money laundering due to its anonymity and scale. The reports stress the imperative for decentralized finance services to comply with Anti-Money Laundering/Combating the Financing of Terrorism regulations to mitigate these emerging threats.
In response to the identified risks, the Treasury announced plans to release the 2024 National Strategy for Combating Terrorist and Other Illicit Finance. This strategic plan, informed by the latest assessments, will outline recommendations to address the highlighted issues, including enhancing compliance and addressing vulnerabilities in the digital finance sector.