FinCEN Proposes Using Section 311 Against Crypto Mixers
- FinCEN has introduced a new Notice of Proposed Rule Making for crypto mixers.
- The agency believes ‘crypto mixing’ is an area of “primary money laundering concern.”
- It seeks to minimize the use of mixers by the Hamas group during the Israel-Hamas conflict.
- FinCEN director said that this is the first use of Section 311 authority against an entire class of transactions.
The United States Treasury’s Financial Crimes Enforcement Network (FinCEN) revealed a new Notice of Proposed Rule Making (NPRM) for crypto mixers that it classifies as international Convertible Virtual Currency Mixing (CVC mixing). The agency believes that these mixers are a danger to financial stability and are used by terrorist groups to further their acts.
As per a press release, FinCEN cited ‘crypto mixing’ as an area of “primary money laundering concern” and seeks to impose recordkeeping and reporting information on people involved in transactions. Interestingly, the public has been given 90 days to comment on the NPRM, and it is clear that the agency maintains a strictly negative stance on mixers.
The Deputy Secretary of the US Treasury, Wally Adeyemo, stated that FinCEN and the Treasury are focused on “combatting the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cyber criminals, and terrorist groups,” while adding:
“More broadly, the Treasury Department is aggressively combatting illicit use of all aspects of the CVC ecosystem by terrorist groups, including Hamas and Palestinian Islamic Jihad.”
Crypto mixers allow users to obfuscate their transaction details so that it is not easy to track their blockchain addresses, among other details. While these mixers have some positive use cases for privacy-focused individuals who do not want to be tracked down by blockchain analysis tools, they are mostly used by cybercriminals and hackers to launder proceeds from their illicit activities.
FinCEN Director Andrea Gacki said that the proposed NPRM marks the first use of Section 311 authority against an entire class of transactions. Interestingly, Section 311 had only been used against individual companies, banks, or countries, such as a private Andorran Bank, Bitzlato, Iran, and North Korea, until now.
Gacki noted that mixers allow “ransomware ecosystems, rogue state actors, and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains,” while adding:
“This is FinCEN’s first ever use of the Section 311 authority to target a class of transactions of primary money laundering concern, and, just as with our efforts in the traditional financial system, Treasury will work to identify and root out the illicit use and abuse of the CVC ecosystem.”
As reported earlier by Bitnation, FinCEN branded crypto mixers as money-laundering hotspots, aiding terrorist groups. Recently, the Hamas group raised millions in cryptocurrencies in its war against Israel, and the agency believes mixers played a vital role.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
