Him Das said FinCEN’s current authority under the PATRIOT Act would
likely not stop actors from engaging in illicit transactions for
ransomware attacks and darknet markets.
Him Das, the acting director of the United States Financial Crimes
Enforcement Network, or FinCEN, said some of the government bureau’s
tools to fight money laundering and terrorism financing may be ill
suited for crypto.
In a Thursday hearing of the House Financial Services Committee on "Oversight of the Financial Crimes Enforcement Network," Das addressed
concerns from lawmakers regarding FinCEN’s authority to pursue
information on illicit digital asset transactions. Kentucky
Representative Andy Barr said many of the current "special measures"
FinCEN was authorized
to use under Section 311 of the PATRIOT Act were “rarely used,” while
Das hinted that digital assets were essentially new ground for the law
aimed at Anti-Money Laundering, or AML, and Countering the Financing of
Terrorism, or CFT.
“Section 311 was enacted in a time when most
financial relationships and transactions were done through the
traditional banking system where there are traditional correspondent
account relationships,” said Das. “Nowadays, cross-border transactions
often include money services businesses, payment systems, [...] foreign
exchange houses as well as cryptocurrency.”
Das added that
FinCEN’s current authority under the PATRIOT Act would likely not stop
actors from engaging in illicit transactions for ransomware attacks and
darknet markets:
“Currently, the Section 311 authority
is not right-sized for the types of threats that we’re seeing through
the use of cryptocurrency.”
In
addition to questions regarding FinCEN’s authority to assess suspicious
transactions, many lawmakers questioned how the bureau might handle
Russian oligarchs and entities using cryptocurrency to evade sanctions.
Das reiterated FinCEN’s position from March
that the Russian government was unlikely to use convertible virtual
currencies to evade large-scale sanctions, but would continue to monitor
the situation:
“We’ve not seen large-scale evasion
through the use of cryptocurrency, but we’re mindful of that and we’re
working with financial institutions so that they’re aware of that
potential that we can identify a large-scale evasion using
cryptocurrency and act on it as well.”
Related: The new episode of crypto regulation: The Empire Strikes Back
According
to Das, FinCEN will also be considering how to handle financial
monitoring requirements for crypto firms that facilitate certain
transactions to self-custodied, or unhosted, wallets. The U.S. Treasury
Department proposed Know Your Customer rules on unhosted wallets for transactions of more than $3,000 in December 2020 and hinted
in its semiannual agenda and regulatory plan released in January it
would be looking at regulating this aspect of the crypto space.
“It’s
not that unhosted wallets are entirely opaque,” said Das. “Unhosted
wallets often engage in transactions with cryptocurrency exchanges,
which are subject to AML/CFT regulation [...] Law enforcement can engage
with cryptocurrency exchanges with respect to suspicious activity
reporting and other reports that might be applicable to them in terms of
getting some degree of understanding in terms of transactions with
unhosted wallets as well.”
source link : https://cointelegraph.com/news/fincen-acting-director-says-patriot-act-provision-isn-t-right-sized-for-crypto-enforcement
