House Financial Services panel explores combating illicit finance in cryptocurrencies.
A congressional hearing Thursday shed light on how lawmakers have access to cryptocurrencies and illicit finance, which is the focus of ongoing legislative efforts.
During a House Financial Services Committee hearing In “Part 2 in the Context of Crypto Crime: Examining Approaches to Combat Illicit Activities,” the parliamentary panel examined ways to prevent malicious actors from using cryptocurrencies for illicit finance.
The hearing will proceed as both Democrats and Republicans agree. Honing This is about anti-money laundering (AML) provisions and legislation. Republican leaders on the House Financial Services Committee have signaled their intention to take a closer look at AML, and Democratic leaders in the Senate plan to advance anti-money laundering legislation.
Rep. French Hill, R-Texas, spoke at the hearing about a bill introduced by Sen. Elizabeth Warren of Massachusetts that would require miners and validators to take anti-money laundering measures, although she did not mention it by name. started.
Hill asked former U.S. Treasury official Michael Mosier, “Why doesn’t it make sense to subject miners and verifiers to Bank Secrecy Act (BSA) requirements?”
Miners and validators operate like internet service providers, Mosier said.
“So if we require validators and miners to conduct financial services businesses, wouldn’t that in itself do anything to prevent the use of cryptocurrencies to finance terrorism?” Hill asked.
Mosier agreed to the offer and added that there would be no customers.
Rep. Warren Davidson of Ohio later asked witnesses what tools law enforcement can use to track down bad actors who utilize digital assets. “I’ve talked to some county prosecutors, local law enforcement officials, and they really want to understand these tools better, and I think that will increase their confidence,” he said.
Gaps and underestimation
Rep. Stephen Lynch, D-Mass., criticized AML standards for organizations operating within the digital asset industry during the hearing. $50 million fine Cryptocurrency exchange Coinbase had to pay New York state regulators last month for failing to maintain proper compliance policies. The New York Department of Financial Services said the failures left Coinbase vulnerable to potential crimes including money laundering and drug trafficking.
“What worries me is that if good companies are facing such challenges, what about overseas companies?” Lynch said. “Due to the global nature of this technology and the crypto-financial system, I am concerned when there is a gap between the best companies.”
Rep. Sean Casten, D-Ill., warned that the amount of illegal activity taking place in the cryptocurrency world could be significantly underestimated. Casten is writing Senator Warren’s bill in the House. strengthen Bank Secrecy Act requirements for cryptocurrencies.
“If a police department tells me that there is no crime in our community because I have been watching for crime in front of the station for the past year and there has been no crime, I would have some questions,” Casten said. On Thursday.
Carole House, a senior fellow at the Atlantic Council who testified at the hearing, said blockchain analytics companies only look at on-chain activity and not what happens off-chain.
Casten also asked what challenges blockchain analytics companies face when tracking illegal activity that has begun to move through blockchain.
Ari Redbord, global policy director at blockchain intelligence firm TRM Labs, told Casten that his company tracks fund flows across 29 different blockchains. He later added that tracking the funds makes it more difficult for malicious actors to find a way in.
Data is misrepresented
This week saw the second hearing focused on cryptocurrencies and illicit finance. At a House Financial Services Committee hearing on Wednesday, Testifying at the hearing, Brian Nelson, Treasury Undersecretary for Terrorism and Financial Intelligence, was asked about an October report in the Wall Street Journal that found Hamas used millions of dollars worth of funds along with other armed groups. Cryptocurrency as a financial tool Before the Israeli attack
The data in the article comes from blockchain forensics company Elliptic, which later stated that its calculations were as follows: misrepresented From pieces. Nelson said the numbers in the article were exaggerated.
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