US Treasury Department Issues Stern Warning on the Use of Cryptocurrencies

The US Treasury Department has issued a stern warning about the increasing use of cryptocurrencies by criminals, fraudsters and other illicit elements.

The warning was part of three national risk assessment reports published on Wednesday, focusing on Money Laundering, Terrorist Financing and Proliferation Financing.

Reports highlight increasing threats, vulnerabilities, and risks related to illicit financing in the United States. The Treasury has detailed how bad actors launder funds using cash and increasingly cryptocurrencies to commit fraud, drug trafficking, people smuggling and corruption.

The Treasury plans to publish a strategic plan in the coming weeks, which will share recommendations for addressing the issues highlighted in today's reports.

“Although laundering of drug trafficking proceeds is predominantly cash-based, the use of virtual assets is a growing concern for U.S. law enforcement,” the Treasury said in its money laundering report.

The ministry also noted that Virtual Asset Service Providers (VASPs), which it defines as an exchange between virtual assets and fiat currencies, among other things, generally do not comply with US requirements. This non-compliance occurs either by claiming that they are not subject to the rules or by not registering properly.

The Treasury also stated that Decentralized Finance (DeFi) service, a financial system under the Bank Secrecy Act, must comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) rules.

*This is not investment advice.