September 15, 2023

Warren, Marshall, Manchin, Graham Expand Coalition for Bipartisan Bill Cracking Down on Crypto’s Use in Money Laundering, Drug Trafficking, Sanctions Evasion

Senators Announce 11 New Cosponsors of Legislation

Digital Asset Anti-Money Laundering Act Closes Loopholes and Combats Money Laundering, Ransomware Attacks, Sanctions Evasion, Drug Trafficking, Elder Fraud, and Other Illicit Financial Activities Using Crypto 

Text of Bill (PDF) | One Pager (PDF)

Washington, D.C. – United States Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.), along with Senators Joe Manchin (D-W.Va.) and Lindsey Graham (R-S.C.) announced an expanded coalition of Senate support for the bipartisan Digital Asset Anti-Money Laundering Act, which would mitigate the illicit finance risks that crypto poses by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AMF/CFT) frameworks that govern much of the financial system.

Senators Gary Peters (D-Mich.), Chair of the Senate Homeland Security and Governmental Affairs Committee, Dick Durbin (D-Ill.), Chair of the Senate Judiciary Committee, Tina Smith (D-Minn.), Angus King (I-Maine), Jeanne Shaheen (D-N.H.), Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), Michael Bennet (D-Colo.), Catherine Cortez Masto (D-Nev.), John Fetterman (D-Pa.), and Sheldon Whitehouse (D-R.I.) joined the bipartisan coalition supporting the bill. 

“Crypto is enabling rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks,” said Senator Warren. “Our expanding coalition shows that Congress is ready to take action – our bipartisan bill is the toughest proposal on the table cracking down on crypto’s illicit use and giving regulators more tools in their toolbox.” 

“I am thrilled to see my colleagues on both sides of the aisle join this commonsense legislation to protect Americans and prevent bad actors from using cryptocurrencies to finance their criminal activities,” said Senator Manchin. “Our bipartisan bill would help fight back against terrorist organizations and rogue state actors, such as Russia and North Korea, who use crypto to bankroll illicit activities and require cryptocurrency platforms to abide by the same anti-money-laundering rules that banks follow. It’s time to bring the Digital Asset Anti-Money Laundering Act to the Senate floor as a matter of national security.” 

“All too often crypto is used to move illicit funds for drug cartels, criminal gangs, terrorist groups and kidnappers,” said Senator Graham. “ Our legislation will help create transparency and provide oversight in an industry that in many cases helps facilitate criminal activity. When it comes to transparency and legality, many of the same rules that apply to the dollar should exist for crypto.”

“Cybercriminals use cryptocurrencies and other digital assets to demand ransom payments and conduct illegal activities in part because they are able to take steps to obscure transactions and evade existing anti-money laundering controls,” said Senator Peters. “This bill will help close loopholes and strengthen the tools needed to counter the illicit use of cryptocurrencies by bad actors and protect our national security.”

“Without proper regulation, crypto will continue to be used by bad actors to launder billions of dollars while sidestepping the anti-money laundering framework traditional financial institutions follow. This puts our national security at risk while criminals and terrorist organizations exploit regulatory loopholes,” said Senator Durbin. “I’m supporting the Digital Asset Anti-Money Laundering Act to ensure crypto is subject to existing regulations, cracking down on the criminals using cryptocurrency to launder money, traffic drugs, and commit cybercrimes.” 

“Far too often, crypto currencies are used by bad actors to launder money, finance illegal activity, and commit cyber-crimes,” said Senator Smith. “This bipartisan legislation will help provide oversight and close loopholes so that the crypto industry plays by the same rules as traditional financial institutions.” 

“Loopholes in our anti-money laundering rules have allowed terrorist groups, rogue nations and drug cartels to utilize cryptocurrency networks to move illicit funds and evade U.S. laws and rules,” said Senator Shaheen. “By enhancing this framework, we can hamper bad actors’ ability to hide money laundering and support law enforcement’s ability to track illegal activity.”  

“This measure will close loopholes to prevent money laundering, human and drug trafficking, and other terrorist activities facilitated through crypto,” said Senator Blumenthal. “Holding crypto platforms to the same standards and regulations as financial institutions is common sense. Wrongdoers must be prevented from conducting criminal activity and evading law enforcement through digital assets.”  

“Cryptocurrency can be a boon for cybercriminals, cartels, and terrorist organizations, allowing them to evade sanctions and finance illicit ventures. We can't allow crimes like money laundering to evade scrutiny simply because it takes place on the blockchain instead of with dollar bills. It's time we extend our common-sense safeguards to digital assets,” said Senator Bennet. 

“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 bill has been endorsed by Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs’ Association, 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 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 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.

Senator Warren has been an outspoken advocate for regulation and oversight of crypto to rein in unchecked illegal activity, and protect consumers and the safety and stability of the financial system:

  • On August 4, 2023, Senators Warren, Tim Kaine (D-Va.), and Chris Van Hollen sent a letter to Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the U.S. Department of the Treasury and National Security Advisor Jake Sullivan, expressing concerns about North Korea’s use of crypto to circumvent international sanctions and fund its illegal weapons programs.
  • On July 21, 2023, at a hearing, Senator Warren warned about the national security risks of rogue states using crypto to evade sanctions and fund their weapons programs, spying, and cyberattacks – calling out North Korea for stealing over $3 billion in crypto over the past 5 years, and using proceeds to fund its illegal nuclear weapons program.
  • On June 8, 2023, Senators Warren and Van Hollen sent a letter to Attorney General Merrick Garland asking the Department of Justice (DOJ) to investigate the crypto exchanges Binance and Binance.US for potentially making a series of false statements to Congress.
  • In May 2023, a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called out crypto’s role in fueling the fentanyl crisis and announced she will reintroduce her bipartisan Digital Asset Anti-Money Laundering Act, a bill that would close loopholes in anti-money laundering rules, cutting off drug suppliers and cartels from using crypto to facilitate their illegal business. 
  • In May 2023, at a hearing of the Senate Armed Services Committee, Senator Warren questioned senior intelligence officials about crypto’s threats to national security as the method of choice for countries to evade sanctions and fund weapons programs, support spying, and promote cyber attacks.
  • In February 2023, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren raised concerns that key parts of the crypto industry are not subject to the same money laundering laws that cover other financial organizations, allowing financial criminals to use crypto to launder billions. 
  • On December 14, 2022, Senators Warren and Roger Marshall (R-Kan.) introduced the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that cryptocurrency and other digital assets pose to the United States’s national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
  • On December 8, 2022, Senators Warren and Tina Smith (D-Minn.) sent letters to three key banking regulators to raise concerns about the ties between the banking industry and crypto firms. 
  • On December 6, 2022, Senators Warren, Marshall, and John Kennedy (R-La.) wrote to Silvergate, the bank that reportedly facilitated the transfer of FTX customer funds to Alameda Research, seeking answers about the bank’s role in the loss of billions of dollars in customer funds.
  • On November 30, 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to keep crypto out of the banking system following FTX’s collapse.
  • On November 23, 2022, Senators Warren and Sheldon Whitehouse (D-R.I.) sent a letter to the Department of Justice requesting personal accountability for former FTX CEO Sam-Bankman Fried and any complicit FTX executives for wrongdoing following the exchange’s collapse. 
  • On November 22, 2022, Senator Warren published an op-ed in the Wall Street Journal urging federal regulators to use their expansive authorities to crack down on crypto fraud and hold the industry to the same basic standards as other financial activities. 
  • On November 17, 2022, Senator Warren, along with Senator Dick Durbin (D-Ill.), sent a letter to Sam Bankman-Fried, founder and former CEO of FTX Trading Ltd. (FTX), and John Jay Ray III, the newly appointed CEO of FTX, seeking information on the reported misuse of billions of dollars of customer funds and other disturbing allegations that continue to emerge about the company’s fraudulent and illicit practices.
  • On October 25, 2022, Senators Warren and Whitehouse and Representatives Alexandria Ocasio-Cortez (D-N.Y.), Jesús “Chuy” García (D-Ill.), and Rashida Tlaib (D-Mich.) sent a letter to the U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the U.S. Department of Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau, seeking information about the steps each regulator is taking to stop the revolving door between financial regulatory agencies and the cryptocurrency industry.
  • In September 2022, Senator Warren sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department and the Financial Stability Oversight Council to build a strong regulatory framework for the crypto market.
  • In July 2022, Senator Warren and her colleagues released the findings from an investigation into seven large cryptomining companies – showing extraordinarily high energy use and climate impacts from cryptomining – and called on the EPA and DOE to take action.
  • In May 2022, Senators Warren and Smith, sent a letter to Fidelity, asking the company to explain its decision to allow Bitcoin investments for 401(k) plans, despite the Department of Labor’s warnings about 401(k) crypto investments.
  • In March 2022, Senator Warren, Senate Armed Services Committee Chair Jack Reed (D-R.I.), Senate Intelligence Committee Chair Mark Warner (D-Va.), and Senate Defense Appropriations Subcommittee Chair Jon Tester (D-Mt.) introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various cryptocurrency tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that cryptocurrency may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain.
  • In March 2022, Senators Warren, Warner, Reed, and Sherrod Brown (D-Ohio), Chair of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the cryptocurrency industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.
  • In December 2021, during a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns over the growing risks presented by stablecoins. 
  • In September 2021, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called on regulators to step up to address crypto's regulatory gaps and ensure an inclusive financial system. 
  • In July 2021, Senator Warren sent a letter to SEC Chair Gary Gensler requesting information about the agency's authority to regulate cryptocurrency exchanges and protect consumers from risks posed by the highly volatile cryptocurrency market.
  • In June 2021, chairing a hearing of the Senate Banking, Housing, and Urban Affairs Committee's Subcommittee on Economic Policy, Senator Warren delivered remarks on the opportunities and risks that digital currencies present. 
  • In a June 2021 interview, Senator Warren called the market for crypto the “wild west,” and said digital currency is “not a good way to buy and sell things and not a good investment and an environmental disaster.”

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