Treasury Warns Crypto Industry of Money Laundering Risks in ‘Mixers’

The cryptocurrency industry must follow US Treasury Department anti-money laundering and sanctions regulations to prevent bad actors from abusing platforms known as “mixers” to launder illicit funds, said a senior official.

Mixers, which allow users to trade cryptocurrencies with relative anonymity, can be a way for illicit actors to obscure the ownership and movement of funds while making it harder for law enforcement to investigate. ‘Have visibility on transfers,’ Elizabeth Rosenberg, assistant secretary of the Treasury for terrorism financing and financial crimes, said in a speech Friday.

Treasury official Elizabeth Rosenberg


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“The challenge is that while these services often operate as money transmitters and therefore have regulatory reporting obligations, they may deliberately operate in non-compliant ways to make it harder for regulators and law enforcement to trace illicit funds,” she said in the speech delivered. at the Crypto Council for Innovation, a Washington-based trade association that lobbies on behalf of the crypto industry.

The Treasury Department in August sanctioned Tornado Casha currency mixer that allows users to mix their funds to conceal ownership, accusing it of enabling the laundering of billions of dollars in virtual currency, including $455 million allegedly stolen by North Korean hackers.

Crypto industry participants have raised questions about the sanctions imposed on Tornado Cash, a platform based on open-source, self-executing software protocols. Some members of the decentralized finance community have expressed concerns about what they see as excessive government pressure on the industry. Some, including

Coinbase Global Inc.

and industry advocacy groups, sued Treasury, alleging the action against Tornado Cash invades the privacy of Americans and First Amendment rights.

Ms Rosenberg said crypto industry participants who submitted comments earlier this year on Treasury plans to mitigate the risks of illicit financing of digital assets recognized that virtual currency companies must comply. anti-money laundering and sanctions requirements. She called on the crypto industry to take action to prevent bad actors from abusing these platforms, adding that the department welcomes opportunities to engage with the industry to learn more about how how these technologies can meet Treasury anti-money laundering and sanctions requirements while still promoting participant privacy.

“Our goal and intention is not to discourage the development of technologies that ensure the confidentiality of virtual asset transfers,” she said.

Write to Mengqi Sun at [email protected]

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