The US Treasury Department wants more steps to curb terrorist financing.
Deputy Secretary of State Adewale O. Adeyemo testified before the Senate Banking Committee on Tuesday (April 9), announcing increased powers to prevent terrorist groups and state institutions from using foreign exchanges and other assets to fund their operations. We plan to request this from members of parliament.
“Our problem is that actors are increasingly finding ways to use cryptocurrencies to hide their identities and move resources,” Adeyemo said in public testimony ahead of the hearing.
These groups are “constantly looking for new ways to move resources in light of the steps we are taking to cut off access to the traditional financial system,” he added.
According to testimony, Iran's Quds Force sent cryptocurrencies to the Gaza militant group Hamas and the Palestinian Islamic Jihad last year. Adeyemo said the Ministry of Finance had taken action against a network that sent small donations to Hamas.
“The more effective our targeting is, the more reason these terrorist groups have to investigate virtual assets,” Adeyemo said. “And let me be clear, it’s not just terrorist groups, it’s state actors like North Korea and Russia as well.”
The Treasury Department wants Congress to greenlight a “secondary sanctions tool” targeting foreign digital asset providers involved in illicit financing.
“While we have had some success eradicating illicit finance in the digital asset ecosystem, we are seeing more terrorists, transnational criminals and rogue states turning to digital assets. Therefore, we need to create an enforcement system that can stop this activity,” Adeimo said. .
Last month, the Treasury Department's Office of Foreign Assets Control (OFAC) cited 13 Russian-linked fintech companies for allegedly using cryptocurrencies to evade sanctions.
“Russia is increasingly relying on alternative payment mechanisms to circumvent U.S. sanctions and continue to finance its war against Ukraine,” Brian Nelson, the U.S. Treasury Department's assistant secretary for terrorism and financial intelligence, said at the time. “
He added: “As the Kremlin seeks to leverage companies in the financial technology sector, the Treasury Department is committed to intercepting and disrupting companies that seek to help sanctioned Russian financial institutions reconnect to the global financial system. I will continue,” he added.
A few days later, Bloomberg News reported that U.S. and British authorities were investigating more than $20 billion in cryptocurrency transfers via a Russia-based exchange.
