United States Deputy Treasury Secretary Adewale Adeyemo reiterated his call for increased enforcement powers for his agency during his testimony before the Senate Banking Committee on April 9. Speaking on the topic of countering illicit finance, terrorism, and sanctions evasion, Adeyemo presented three proposed reforms aimed at enhancing the United States’ ability to combat international criminals who use cryptocurrencies.
Adeyemo’s proposals build upon suggestions put forth by the Treasury Department in November. During his testimony, Adeyemo outlined three specific changes that the department is seeking. First, they want to implement secondary sanctions that target “foreign digital asset providers” involved in illicit finance. Adeyemo explained that while U.S. sanctions currently prohibit institutions from using U.S. correspondent accounts and transaction processing through banks, crypto exchanges and money services often operate outside of this framework. Therefore, a new secondary sanctions tool is necessary, although Adeyemo did not provide further details on its form.
The second reform sought by the Treasury Department is an expansion of the authorities’ powers to regulate the digital asset ecosystem. Lastly, Adeyemo highlighted the challenge of jurisdictional risk posed by offshore cryptocurrency platforms. He referred to committee member Elizabeth Warren and chair Sherrod Brown’s Digital Asset Anti-Money Laundering Act of 2022, which addresses this issue and was reintroduced by Warren in the current congress. Both Warren and Brown are known for their skepticism towards cryptocurrencies.
Adeyemo emphasized the use of cryptocurrencies by terrorist groups, North Korea, and in the fentanyl trade as evidence supporting the Treasury’s need for greater enforcement powers. While acknowledging that terrorists still primarily rely on traditional financial products and services, he warned that without the necessary tools provided by Congress, the use of virtual assets by these actors will only continue to grow.
Ahead of Adeyemo’s testimony, Banking Committee chair Sherrod Brown expressed his support for the Treasury Department’s enforcement goals in a statement. Ranking member Tim Scott commended the work done by the Treasury Department but focused on foreign policy concerns that he believes pose risks to U.S. security.
In summary, Deputy Treasury Secretary Adeyemo’s testimony highlighted the importance of granting his agency more enforcement powers to tackle illicit finance and terrorism facilitated by cryptocurrencies. The Treasury Department’s proposed reforms aim to address gaps in the current regulatory framework and enhance the United States’ ability to combat international bad actors.