Marshall, Warren, Manchin, Graham Renew Push for Bipartisan Legislation to Crack Down on Crypto’s Use in Money Laundering, Drug Trafficking, and Financing of Terrorism and Rogue Nations 

Legislation to Close Loopholes and Combat Money Laundering, Ransomware Attacks, Sanctions Evasion, Drug Trafficking, Elder Fraud, and Other Illicit Financial Flows in Crypto

Provisions of the Digital Asset Anti-Money Laundering Act were Included in the Senate-passed National Defense Authorization Act

Washington, D.C. – United States Senators Roger Marshall (R-Kan.), Elizabeth Warren (D-Mass) along with Senators Lindsey Graham (R-S.C.) and Joe Manchin (D-W.Va.) reintroduced the Digital Asset Anti-Money Laundering Act, legislation that would mitigate the risks that digital assets pose to our national security by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks governing the greater financial system.

“This legislation is a matter of national security. Mastermind hackers from adversarial countries like Iran, Russia, and North Korea are committing cyber crimes against the United States to the tune of BILLIONS of dollars; they must be held accountable,” said Senator Roger Marshall. “The reforms outlined in our legislation will help us fight back and secure our digital assets by using proven methods that our domestic financial institutions have been complying with for years. Our commonsense, bipartisan legislation will crack down on crypto-criminals and sophisticated criminal cyber networks who use anonymity to spy, steal, and circumvent our nation’s laws.”

“Crypto has become the payment method of choice for rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions of dollars in stolen funds, evade sanctions, fund illegal weapons programs, and profit off of devastating cyberattacks,” said Senator Elizabeth Warren. “This bipartisan bill is the toughest proposal on the table to crack down on crypto crime and give regulators the tools they need to stop the flow of crypto to bad actors.”

“All too often crypto is used to move illicit funds for drug cartels, criminal gangs, terrorist groups and kidnappers,” said Senator Lindsey Graham.  “ Our legislation will help create transparency and provide oversight in an industry that in many cases helps facilitate criminal activity. When it comes to transparency and legality, many of the same rules that apply to the dollar should exist for crypto.”

“Without tougher controls, decentralized digital assets can pose a significant risk to our national security by facilitating the financing of illicit activities, such as drug trafficking or money laundering from terrorists and rogue state actors,” said Senator Joe Manchin. “Our bipartisan legislation would curtail these security risks and require cryptocurrency platforms to abide by the same anti-money-laundering rules that banks have to follow. I urge my colleagues on both sides of the aisle to support this commonsense legislation to protect Americans by preventing bad actors from using cryptocurrencies to finance their criminal activities.”  

This bill has been endorsed by Bank Policy Institute, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, AARP, National Consumer Law Center (on behalf of its low-income clients), and National Consumers League.

“BPI supports bipartisan efforts to help crack down on money laundering and believes this measure is an important step in that direction,” said the Bank Policy Institute. “The existing anti-money laundering and Bank Secrecy Act framework must account for digital assets, and we look forward to engaging in this process to defend our nation’s financial system against illicit finance in all its forms.”

The Treasury Department, Department of Justice, and other national security and financial crime experts have warned that digital assets are increasingly being used for money laundering, drug trafficking, ransomware attacks, theft and fraud schemes, terrorist financing, and other crimes. Rogue nations like Iran, Russia, and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. Nearly half of North Korea’s missile program, for example, is estimated to be funded by cybercrime and digital assets. In 2022, illicit digital asset transactions totaled at least $20 billion – an all-time high. 

The Digital Asset Anti-Money Laundering Act would: 

• Extend Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer requirements, to digital asset wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions.
• Address a major gap with respect to “unhosted” digital wallets – which allow individuals to bypass AML and sanctions checks – by directing FinCEN to finalize and implement its December 2020 proposed rule, which would require banks and money service businesses (MSBs) to verify customer and counterparty identities, keep records, and file reports in relation to certain digital asset transactions involving unhosted wallets or wallets hosted in non-BSA compliant jurisdictions.
• Direct FinCEN to issue guidance to financial institutions on mitigating the risks of handling, using, or transacting with digital assets that have been anonymized using digital asset mixers and other anonymity-enhancing technologies. 
• Strengthen enforcement of BSA compliance by directing the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs and other digital asset entities with BSA obligations and directing the Securities and Exchange Commission and Commodity Futures Trading Commission to establish AML/CFT compliance examination and review processes for the entities they regulate. 
• Extend BSA rules regarding reporting of foreign bank accounts to include digital assets by requiring United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service. 
• Mitigate the illicit finance risks of digital asset ATMs by directing FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of the kiosks they own or operate and verify customer and counterparty identity.