Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) joined U.S. Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.), Joe Manchin (D-W.Va.), and Lindsey Graham (R-S.C.) in cosponsoring the bipartisan Digital Asset Anti-Money Laundering Act, which would close loopholes in current law and bring cryptocurrency companies into grater compliance with the anti-money laundering and countering the financing of terrorism (AMF/CFT) frameworks that govern much of the financial system.
“We must stop transnational drug cartels and other criminal organizations from funding their illegal activity through cryptocurrencies,” said Senator Cortez Masto. “Our bipartisan bill will make sure cryptocurrency companies follow the same rules as banks, close loopholes that criminals are taking advantage of, and give our financial institutions the necessary tools to go after bad actors. I will keep working across the aisle to protect Nevada communities and families.”
This bipartisan bill has been endorsed by Bank Policy Institute, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, AARP, National Consumer Law Center (on behalf of its low-income clients), and National Consumers League.
“BPI supports bipartisan efforts to help crack down on money laundering and believes this measure is an important step in that direction,” said the Bank Policy Institute. “The existing anti-money laundering and Bank Secrecy Act framework must account for digital assets, and we look forward to engaging in this process to defend our nation’s financial system against illicit finance in all its forms.”
The Treasury Department, Department of Justice, and other national security and financial crime experts have warned that digital assets like cryptocurrencies are increasingly being used for money laundering, drug trafficking, ransomware attacks, theft and fraud schemes, terrorist financing, and other crimes. Rogue nations like Iran, Russia, and North Korea have used digital assets to launder stolen funds, evade American and international sanctions, and fund illegal weapons programs. Nearly half of North Korea’s missile program, for example, is estimated to be funded by cybercrime and digital assets. In 2022, illicit digital asset transactions totaled at least $20 billion – an all-time high.
The bipartisan Digital Asset Anti-Money Laundering Act would:
- Extend Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer requirements, to digital asset wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions.
- Address a major gap with respect to “unhosted” digital wallets – which allow individuals to bypass AML and sanctions checks – by directing FinCEN to finalize and implement its December 2020 proposed rule, which would require banks and money service businesses (MSBs) to verify customer and counterparty identities, keep records, and file reports in relation to certain digital asset transactions involving unhosted wallets or wallets hosted in non-BSA compliant jurisdictions.
- Direct FinCEN to issue guidance to financial institutions on mitigating the risks of handling, using, or transacting with digital assets that have been anonymized using digital asset mixers and other anonymity-enhancing technologies.
- Strengthen enforcement of BSA compliance by directing the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs and other digital asset entities with BSA obligations and directing the Securities and Exchange Commission and Commodity Futures Trading Commission to establish AML/CFT compliance examination and review processes for the entities they regulate.
- Extend BSA rules regarding reporting of foreign bank accounts to include digital assets by requiring United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service.
- Mitigate the illicit finance risks of digital asset ATMs by directing FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of the kiosks they own or operate and verify customer and counterparty identity.
In addition to Senators Cortez Masto, Warren, Marshall, Manchin, and Graham, this bipartisan legislation is supported by Senators Gary Peters (D-Mich.), Dick Durbin (D-Ill.), Tina Smith (D-Minn.), Angus King (I-Maine), Jeanne Shaheen (D-N.H.), Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), and Michael Bennet (D-Colo.).
You can read the full bill text HERE.
As a member of the Senate Banking, Housing, and Urban Affairs Committee and a former Attorney General, Senator Cortez Masto has been a strong advocate for consumers and small business owners. Her bipartisan legislation to combat money laundering and terrorism was signed into law, ensuring the Financial Crimes Enforcement Network (FinCEN) works with tribal law enforcement agencies, protects against domestic terrorism and focuses on virtual currencies.
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