The Treasury Department is planning to designate international crypto mixers as money-laundering hubs, citing Hamas’ use of them along with other terrorist groups, according to The Wall Street Journal.
That designation is a form of sanction, the WSJ reported, noting it will require certain reporting for any financial transactions.
“Today’s action underscores Treasury’s commitment to combating the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cyber criminals, and terrorist groups,” said Wally Adeyemo, deputy Treasury secretary, according to the WSJ. “More broadly, the Treasury Department is aggressively combating illicit use of all aspects of the CVC ecosystem by terrorist groups, including Hamas and Palestinian Islamic Jihad.”
The Treasury Department did not immediately respond to a request for comment from The Block.
The designation comes shortly after a report from the WSJ that said that said Hamas, along with other militant groups, used crypto as a financing tool ahead of attacks in Israel earlier this month. Sen. Elizabeth Warren, D-Mass., along with more than a hundred other lawmakers including both Democrats and Republicans, said they were concerned about how Hamas raised millions of dollars through crypto in a letter sent to the Biden administration on Tuesday.
“As Congress considers legislative proposals designed to mitigate crypto money laundering and illicit finance risks, we urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies,” the letter stated.
Warren’s op-ed
Warren followed the letter with an op-ed published in WSJ Wednesday evening.
“Decentralized finance’ companies should be subject to the same anti-money-laundering rules as banks,” she wrote along with Sen. Roger Marshall, a Republican from Kansas.
Yaya Fanusie, director of anti-money laundering at the Crypto Council for Innovation, pushed back against that letter on Thursday, arguing that crypto is regulated in the U.S. and follows anti-money laundering rules.
“In the US, exchanges and other financial intermediaries are money service businesses (MSBs) under BSA regulations and are already required to register with FinCEN and report suspicious activity potentially indicative of crime,” Fanusie said. “This means that exchanges do AML/KYC checks and sanctions screening on all customers.”
Chainalysis said Wednesday that some recent reports about the supposed use of crypto by terrorist groups might be overstating metrics and using “flawed analyses.”
“Terrorist organizations have historically used and will likely continue to use traditional, fiat-based methods such as financial institutions, hawalas, and shell companies as their primary financing vehicles,” it wrote.
