FinCEN Moves to Brand Crypto Mixers as Money Laundering Hubs
- FinCEN claims crypto mixers are money-laundering hotspots, aiding terrorist groups
- Several reports claim that Hamas has relied on crypto donations for funding.
- Chainalysis said some reports of crypto being used for fraud are overestimated and used flawed analysis.
The Wall Street Journal reports that the Treasury’s Financial Crimes Enforcement Network (FinCEN) plans to classify cryptocurrency mixers as hotspots for money laundering due to their use by Hamas and other terrorist organizations. Deputy Treasury Secretary Wally Adeyemo claimed the move was part of its efforts to combat the use of cryptocurrencies for illegal activities.
Adeyemo stated that cryptocurrencies were being used by “state-affiliated cyber actors, cybercriminals, and terrorist groups,” citing Hamas as an example.
He said in a statement:
Today’s action underscores the Treasury’s commitment to combating the exploitation of convertible virtual currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cybercriminals, and terrorist groups. More broadly, the Treasury Department is aggressively combating the illicit use of all aspects of the CVC ecosystem by terrorist groups, including Hamas and Palestinian Islamic Jihad.
FinCEN, in a notice, said that it determined that “the percentage of CVC [convertible virtual currencies] transactions processed by CVC mixers that originated from likely illicit sources is increasing.”
The financial crimes watchdog proposed measures that will see domestic financial organizations and agencies “implement certain recordkeeping and reporting requirements” for transactions involving crypto mixers.
FinCEN noted that the public will have 90 days from the time the crypto mixer proposal is published in the Federal Register to provide feedback. The agency is likely to review all of the comments before deciding whether or not to implement the suggested policy for cryptocurrency mixers.
Thursday’s designation comes amidst multiple reports that Hamas and other terrorist organizations used cryptocurrency to finance strikes on Israel earlier this month. Several US lawmakers are mounting pressure on the Biden administration to respond to the use of crypto for terrorism.
Bitnation reported that Senator Elizabeth Warren led a group of lawmakers, both Democratic and Republican, to express their concerns about how Hamas generated millions of dollars through cryptocurrency.
The group authored a letter asking the administration to “swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies.”
On Wednesday, Senator Warren, known for her strong opposition to the crypto industry, called for Decentralized Finance (DeFi) platforms to be subject to the same anti-money-laundering rules as banks.
However, several crypto advocacy groups have criticized Warren for her claims about the use of crypto for crimes. Yaya Fanusie, director of anti-money laundering at the Crypto Council for Innovation, argued that crypto in the US observes anti-money laundering rules.
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