The US Treasury fears that terrorist groups and sanctioned counterparties will increase the use of crypto assets to circumvent sanctions. This was stated by Deputy Minister Adewale Adeyemo during a speech in the Senate.
“Our challenge is that malicious actors are increasingly finding ways to hide their identities and move resources through virtual assets,” Adeyemo said.
The Deputy Minister of Finance gave several examples. In particular, he classified the Russian Federation and North Korea as malicious entities.
He also stated that the Iranian military unit Quds Force (an organization designated as a terrorist organization) sent cryptocurrency to Hamas and Palestinian Islamic Jihad (an organization designated as a terrorist organization) in the Gaza Strip.
In his speech, Adeyemo noted that the Ministry of Finance's actions to block such financial flows have had some success, but enforcement needs to be tightened.
“While we continue to believe that terrorists prefer to use traditional financial instruments, we fear that without Congressional action to provide us with the necessary authority, the use of crypto assets by these entities will only increase,” the politician said.
The politician referred to three proposed reforms aimed at tightening oversight, namely:
- the introduction of secondary sanctions against foreign providers of crypto services, including the prohibition of correspondent accounts and the processing of transactions in the American financial field of entities associated with them;
- modernizing and eliminating gaps in the department's existing powers by expanding their scope;
- solving the problem of jurisdictional risk associated with offshore cryptocurrency platforms. This assumes, in particular, that the authorities of the US Treasury will be able to act extraterritorially when there is a threat of potential damage to national security.
Let us recall that in October 2023, information appeared in the media that terrorist groups associated with Hamas had collected millions of dollars in donations in cryptocurrencies.
Against this background, some American politicians have called on the US Department of Justice to conduct a comprehensive audit of the activities of large service providers, in particular Binance.
