At Hearing, Big Bank CEOs agree with Warren on Need to Apply Anti-Money Laundering Rules To Crypto Companies to Protect National Security
Warren: “When it comes to banking policy, I’m not usually holding hands with the CEOs of multi-billion dollar banks. But this is a matter of national security. Terrorists, drug traffickers, and rogue nations should be barred from using crypto for their dangerous and criminal activities.”
Washington, D.C. —Today, at a hearing of the Committee on Banking, Housing and Urban Affairs, U.S. Senator Elizabeth Warren (D-Mass.) questioned executives from some of the nation's largest financial institutions – including JPMorgan’s Jamie Dimon, Citigroup’s Jane Fraser, Bank of America’s Brian Moynihan, Wells Fargo’s Charlie Scharf, State Street’s Ronald O’Hanley, BNY Mellon’s Robin Vince, Goldman Sachs’ David Solomon and Morgan Stanley’s James Gorman – on the unequal application of anti-money laundering rules to large crypto firms and emphasized how her bipartisan legislation would extend anti-money laundering rules, which financial institutions including banks, precious metals dealers, and Western Union are required to follow, to the entire crypto ecosystem stopping crypto financing of terrorism and illicit acts, and strengthening national security.
At the hearing, Senator Warren highlighted why cryptocurrency is useful to criminals, pointed out the unequal application of the Bank Secrecy Act to crypto companies compared to larger financial firms, and received verbal confirmations from each CEO that they agreed that crypto companies should have to adhere to the same anti-money laundering rules as other financial institutions as a matter of fairness and national security.
Statement: Annual Oversight of Wall Street Firms
U.S. Senate Committee on Banking, Housing and Urban Affairs
Wednesday, December 6, 2023
Senator Warren: Thank you, Mr. Chairman.
So today, I'm going to talk about how criminals are using our financial system to move money to finance terrorists, drug traffickers, and sanctioned countries, like Russia and Iran and North Korea. Our witnesses are the CEOs of the largest banks in the United States, and they deal with this issue every single day.
Mr. Moynihan, you are the CEO of Bank of America. So let me ask you: If a terrorist group that wanted to attack the United States tried to move money through Bank of America accounts, do you have systems in place to identify that activity, to report it to law enforcement, and to shut it down?
Brian Moynihan, Chief Executive Office, Bank of America: Yes, we do, Senator.
Senator Warren: Okay, Mr. Diamond, you are the CEO of JPMorgan. What about you? If a terrorist group tried to move money through JPMorgan accounts, do you have systems in place to catch it, to report it, and to shut it down?
Jamie Dimon, Chief Executive Office, JPMorgan: We have extensive systems in place, but no system is foolproof.
Senator Warren: Okay, but you do have systems in place, work on this every day.
And let me just ask all of you in the interest of time, just raise your hand if you have those programs in place.
[All witnesses raise their hands]
Good. I see all the hands up.
Look, I believe that none of you want your banks to be used to finance terrorist attacks. But, let's be clear: None of you runs these anti-money laundering programs out of the goodness of your hearts.
Back in 1978, Congress passed the Bank Secrecy Act to make sure that banks don't run a financial system that is open to terrorists and drug traffickers and rogue nations. But time passed, and the crooks got more sophisticated. So, after the 9/11 terrorist attacks, law enforcement discovered the way terrorists had gotten around the Bank Secrecy Act and Congress was then called on to update the laws to cut off future access. And that's what Congress did.
Today's terrorists have a new way to get around the Bank Secrecy Act: Cryptocurrency.
Last year, an estimated $20 billion in illicit crypto transactions funded every kind of dangerous criminal. North Korea has funded at least half its missile program, including nuclear weapons. using the proceeds of crypto-crime. And Israeli officials have confirmed that Hamas received millions of dollars through crypto transactions, including, quote, “large sums from Iran.”
Mr. Dimon, you've been CEO of JP Morgan for almost two decades. Can you explain why crypto is such an attractive financial tool for terrorists, drug traffickers and rogue nations?
Jamie Dimon: I've always been deeply opposed to crypto, Bitcoin, etc.
You pointed out the only true use case for it is criminals, drug traffickers, anti-money laundering, tax avoidance, and that is a use case because it is somewhat anonymous, not fully, and because you can move money instantaneously and because it doesn't go through – as you mentioned – all these systems built up over many years. Know your customers, sanctions, OFAC – they can bypass all that. If I was the government, I’d close it down.
Senator Warren: Okay. Well, that's what we're going to talk about.
Because last week, federal law enforcement asked Congress to update the banking laws, saying quote, “We cannot rely on statutory definitions that are decades old to address the illicit finance risks that we face in 2023.” And these law enforcement officials specifically called out the use of crypto to finance terrorist attacks.
Now, the laws clearly need to be updated. But crypto lobbyists are working overtime to block any legislation. They claim crypto is special. And it shouldn't have to comply with the Bank Secrecy Act, even if that means letting terrorists, and drug traffickers, and ransomware criminals, and rogue nations move billions of dollars totally unrestricted.
So, I'd like to go down the line here. Maybe I can start with you. Mr. Scharf. Do you think that crypto companies facilitating financial transactions should have to follow the same anti-money laundering rules that your bank has to follow?
Charlie Scharf, Chief Executive Officer, Wells Fargo: Absolutely, Senator.
Senator Warren: Okay, I like that, ‘Absolutely.’
Let's go on down the line. Mr. Moynahan?
Brian Moynihan: Absolutely.
Jamie Dimon: Absolutely. Positively. Certainly.
Jane Fraser, Chief Executive Officer, Citigroup: Unanimous. Absolutely.
Ronald O’Hanley, Chief Executive Officer, State Street: Absolutely.
Robin Vince, Chief Executive Officer, BNY Mellon: Absolutely.
James P. Gorman, Chief Executive Officer, Morgan Stanley: Absolutely.
Senator Warren: All right. It's the word of the day.
You know, we've got a way to do this. Senator Marshall and I, along with 18 of our Senate colleagues, including Senator Cortez Masto, Senator Smith, Senator Fetterman, Senator Warnock, Senator Butler, who are here right now and on the Senate Banking Committee, have a bill that would do exactly what law enforcement asks. It would extend the anti-money laundering rules that banks follow so that crypto could not be used for financing terrorist attacks, or North Korea's nuclear program.
When it comes to banking policy, I am not usually holding hands with the CEOs of multibillion dollar banks. But this is a matter of national security. Terrorists, drug traffickers and rogue nations should be barred from using crypto for their dangerous activities. It's time for Congress to act.
Thank you, Mr. Chairman.
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