ICBA called on the Financial Crimes Enforcement Network to expand on its proposal to combat crime enabled by cryptocurrency mixers.
Background: Cryptocurrency mixing broadly describes various technologies and techniques used to obscure key details in crypto transactions. Cybercriminals and malicious state-actors often use mixers, such as Tornado Cash, to launder stolen assets and make the investigative trail more difficult.
FinCEN Proposal: In response, FinCEN determined that cryptocurrency mixing constitutes a “primary money laundering concern.” Its proposed rule would introduce recordkeeping and reporting requirements for any financial institution directly involved in crypto transactions to help the agency understand illicit crypto trends and track down bad actors.
ICBA Comments: In a comment letter, ICBA said:
Recordkeeping and reporting requirements are not enough to adequately protect U.S. consumers and businesses.
FinCEN should do more to combat mixer-enabled crime, including considering the roles played by the wider crypto ecosystem, especially decentralized finance exchanges, bridges, and unhosted wallets.
FinCEN should strengthen its collaboration with international partners to confront the threat of crypto mixing.
The agency should specify how it intends to educate covered institutions on adequately identifying and reporting information on crypto mixers.
More: The Treasury Department’s Office of Foreign Assets Control this week announced a new round of sanctions on Hamas related to the use of cryptocurrency to support terrorist activities. ICBA has called on policymakers to ensure new policies directed at the crypto sector fully reflect its risks and to ensure protecting national security and implementing anti-crime measures are primary drivers of crypto policymaking and regulation.
