More countries need to put cryptocurrency regulations in place to protect the financial system and national security.
That’s according to the undersecretary of the U.S. Treasury’s Office of Terrorism and Financial Intelligence (TFI).
Giving a speech before the Securities Industry and Financial Markets Association Anti-Money Laundering and Financial Crimes Conference, Sigal Mandelker said that criminals are trying to find innovative ways around their controls to exploit the financial system.
Citing Venezuela as an example, Mandelker explained that the country’s plans to introduce the ‘petro’ cryptocurrency was an example of how it was attempting to ‘hide their ill-gotten gains and finance their illicit activities’ as they ‘try and sidestep our powerful sanctions.’
She went on to say that the TFI are closely monitoring ‘technological innovations involving virtual currency’ and that they were ‘aggressively targeting rogue actors.’ Notably, though, Mandelker added that there was a lack of anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations worldwide, which is making the situation worse.
She said:
Currently, we are one of the only major countries in the world, along with Japan and Australia, that regulate these activities for AML/CFT purposes. But we need many more countries to follow suit, and have made this a priority in our international outreach, including through the Financial Action Task Force.
Mandelker further stated that it was the $110 million fine against BTC-e, an Internet-based cryptocurrency exchange, that saw the Treasure taking action against the company and Russian national Alexander Vinnik, who directed and supervised BTC-e’s operations and finances, adding:
The company lacked basic controls to prevent the use of its services for illicit purposes.
Citing several examples of ‘egregious behavior,’ the undersecretary called for regulators to ‘supercharge’ their efforts in the fight against financial crime and the treats to national security.
Yet, while she has called for global regulators to unite how easy it will be to bring everyone on board is easier said than done. As Mandelker said the U.S. is one of a limited number of countries that are regulating the crypto market. For many others this doesn’t seem necessary.
Earlier this month, Daniele Nouy, European Central Bank’s chief supervisor, said that regulating digital currencies wasn’t a top priority for them. Whereas, Singapore’s Deputy Prime Minister Tharman Shanmugaratnam, has expressed the view that there is ‘no strong case to ban cryptocurrency trading‘ as they don’t pose a risk to the country’s financial system. Not only that, but considering some digital currencies function on complete anonymity and privacy, it seems that it may be hurdles in the way to fully regulate cryptocurrencies.
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