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US Treasury to Increase Focus on Combating Illicit Financial Activities Through Crypto and Emerging Technologies
The US Treasury Department intends to focus on managing the risks posed by cryptocurrencies and other emerging technologies in the coming months through comprehensive regulation.
The Treasury has made digital assets a key focus area in its 2024 plan National strategy to combat terrorism and other illicit financing report.
The strategy outlines a comprehensive approach to mitigate the misuse of these technologies by illicit actors while promoting a transparent and secure financial system.
Closing regulatory gaps
The Treasury report highlighted the evolving threat environmentwith criminal organizations increasingly leveraging cryptocurrencies and other digital assets to facilitate illegal activities such as money laundering, terrorist financing and cybercrime.
Strategy 2024 aims to close regulatory gaps, strengthen enforcement measures and strengthen international cooperation to effectively combat these threats. Treasury intends to implement comprehensive regulation for digital assets and virtual asset service providers (VASPs).
Additionally, Treasury will propose rules to mandate anti-money laundering and anti-terrorism financing (AML/CFT) programs for investment advisors and increased transparency in unfunded real estate transactions. It will also monitor and adapt rules for emerging technologies such as DeFi to prevent criminals from exploiting them.
The report also states that it remains crucial to improve the operational effectiveness of law enforcement and other government agencies. The strategy includes initiatives to provide robust training, leverage advanced technologies such as AI and blockchain analytics, and foster public-private partnerships to share vital information on illicit activities.
Treasury has highlighted the importance of international collaboration to tackle illicit financing, working with global partners to strengthen AML/CFT standards and share intelligence to disrupt cross-border criminal networks.
Responsible technological advancement
The Treasury will also prioritize supporting responsible technological progress. The strategy called for the development of secure digital identity solutions and promoted innovation in AML/CFT compliance technologies within the private sector.
The Treasury intends to finalize these regulations and continue address vulnerabilities in sectors that are not currently subject to comprehensive AML/CFT measures.
The report highlights the critical need to remain vigilant and responsive to new threats. The ongoing modernization of the AML/CFT regime has enabled the public and private sectors to effectively address the most significant illicit financial risks.
Despite significant progress, Treasury has recognized continuing challenges in combating illicit activities. He added that the growing sophistication of illicit actors, particularly in the area of virtual assets, requires continued adaptation and innovation of regulatory and enforcement frameworks.
Treasury has called for additional resources and legislative support to strengthen its supervision and compliance efforts of non-bank financial institutions and new market entrants.
Strategy 2024 reaffirmed the U.S. government’s commitment to maintaining a secure and transparent financial system. By addressing the risks associated with digital assets and fostering international collaboration, Treasury aims to create a resilient environment that deters illicit activity and supports legitimate financial innovation.