The US government is intensifying its efforts to address the issue of cryptocurrency criminal funding, particularly in response to recent terrorist attacks in Israel. Concerns have been raised about certain crypto firms not doing enough to prevent illegal funds from flowing into the hands of bad actors. During the Royal United Services Institute in London, US Deputy Treasury Secretary Wally Adeyemo highlighted the evolving nature of the US’s fight against terrorism, as various groups like Hamas and the Kremlin employ new tactics to bypass financial sanctions.
Collaborative Measures to Prevent Illegal Funding
To prevent terrorists from accessing funds, the US Treasury Department is working closely with financial institutions and virtual currency platforms to establish effective measures. The aim is to impede the flow of illicit funds and disrupt the funding network of these organizations. However, significant challenges persist in the fight against cryptocurrency-related crimes.
“A few digital asset firms are seeking to enable decentralized access to funds without adequately considering the consequences, especially when it involves illicit resources,”
– Wally Adeyemo, US Deputy Treasury Secretary
To overcome these obstacles, the US government and its allies are prepared to take necessary actions to clamp down on such operations. Adeyemo outlined the expected line of action as the crackdown on terrorist financing intensifies:
- Targeting emerging shell companies, intermediaries, and facilitators that facilitate the flow of illicit funds and donations
- Increasing information sharing and collaboration with allies to weaken and disrupt the funding network of terrorist organizations
- Engaging with relevant stakeholders and financial institutions to ensure steps are taken to prevent the flow of funds for illegal purposes
Efforts in Response to Israeli and Hamas Hostilities
In light of the Israeli and Hamas hostilities, the US government has been proactive in seeking ways to cripple the funding pipeline of the terrorist organization. One significant action taken by the Treasury Department is the imposition of sanctions on key Hamas members, operatives, and financial backers. This includes a Gaza-based virtual currency exchange and its operator, who facilitated illicit fund movements within their networks.
In addition, over 1,000 entities and individuals serving as proxies for the Iranian regimes in enabling terrorist attacks on Israel have been added to the US sanctions list. The Financial Crimes Enforcement Network (FinCEN) has also released a notice for proposed rulemaking (NPRM) to designate convertible virtual currency (CVC) mixing services as a vehicle for money laundering. CVC mixing services allow users to send funds discreetly by bundling transactions randomly to evade detection. The NPRM is aimed at improving transparency in fund movements within the crypto space and reducing terrorist funding.
