HFS Subcommittee Considers Regulatory Gaps in AML/CFT Enforcement

The House Financial Services Committee, Subcommittee on Digital Assets, Financial Technology and Inclusion considered the gaps in regulatory enforcement efforts to combat the use of crypto-currency by bad actors.

At a hearing entitled "Crypto Crime in Context," industry experts testified on the findings from the Treasury Department's 2024 National Money Laundering Risk Assessment which, among other things, "highlighted inconsistent implementation of international AML/CFT standards as a gap in law enforcements’ reach and authorities." (See also Subcommittee Staff Memorandum).

• Coinbase Director, Financial Crimes Legal, Grant Rabenn. Mr. Rabenn argued that (i) supporting blockchain and crypto technology is crucial for U.S. leadership; (ii) keeping the crypto industry within U.S. jurisdiction ensures compliance with laws, enhances law enforcement capabilities, and secures the financial system against external threats and vulnerabilities; (iii) there is an enforcement gap in noncompliant offshore exchanges in areas such as sanctions evasion, terrorist finance and criminal activity, and Congress should provide funding to close the gap; and (iv) legislation that could impede the effectiveness of existing law enforcement tools would unintentionally hinder the development of the U.S. crypto economy.
• TRM Labs Global Head of Policy and Government Affairs, Ari Redbord. Mr. Redbord recomended that Congress (i) support the ability of U.S. regulators, law enforcement and national security officials to leverage blockchain technology to track financial crime; (ii) ensure that Treasury and other regulators have the tools and authorities necessary to effectively go after illicit actors who seek to take advantage of new technologies; and (iii) balance national security interests with the need for privacy in a more open financial system by encouraging public-private partnerships, information sharing, capacity building and innovation.
• Circle, Senior Director of Global Policy and Regulatory Strategy, Caroline Hill. Ms. Hill asserted that (i) the power of our economic tools depends disproportionately on the power that the Treasury Department has over U.S. financial institutions, the U.S. dollar and international payment services; (ii) the financial sector, through compliance programs, has and should remain the first line of defense in countering illicit finance; (iii) the Treasury Department should make their assessments of fintech accessible to the public; (iv) the White House should support the development of FinTech; and (v) the United States must play a strong leadership role in setting international standards for AML regulations around digital assets.