Senators Reintroduce Bipartisan Bill on Digital Assets and Anti-Money Laundering

Senators Elizabeth Warren (D-MA), Roger Marshall (R-KS), Joe Manchin (D-WV) and Lindsey Graham (R-SC) reintroduced the Digital Asset Anti-Money Laundering Act. The bill would bring digital assets within the Bank Secrecy Act’s AML/CFT regulatory framework.

The proposed legislation was first introduced in December 2022. As previously covered, the bill requires FinCEN to categorize digital asset wallet providers, miners, validators and other network participants that facilitate digital asset transactions as money service businesses, which are required to implement AML/CFT compliance programs pursuant to the BSA. The bill also directs FinCEN to finalize its 2020 proposed rulemaking requiring banks and money business services to keep records on customer and counterparty identities, as well as transactions involving certain digital assets that use unhosted wallets or wallets hosted in a non-BSA-compliant jurisdiction. The bill would also require individuals engaged in offshore digital asset transactions with a value greater than $10,000 to file a Report of Foreign Bank and Financial Accounts with the IRS.

The current version of the legislation also contains language directing FinCEN to issue guidance on mitigating risks associated with transacting with digital asset mixers and other "anonymity-enhancing technologies" (but would not prohibit financial institutions from using digital asset mixers at all).