Luján Joins Coalition to Support Bill Cracking Down on Crypto’s Use in Money Laundering, Drug Trafficking, Sanctions Evasion

Washington, D.C. – U.S. Senator Ben Ray Luján (D-N.M.) joined U.S. Senators Elizabeth Warren (D-Mass.), Raphael Warnock (D-Ga.), Laphonza Butler (D-Calif.), Chris Van Hollen (D-Md.), all members of the Senate Banking, Housing, and Urban Affairs Committee, to support the bipartisan Digital Asset Anti-Money Laundering Act, which would mitigate the illicit finance risks that crypto poses by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AMF/CFT) frameworks that govern much of the financial system.

“Cryptocurrencies operate with little to no oversight. This leaves consumers vulnerable, and creates new ways for bad actors to finance terrorism and drug trafficking,” said Senator Luján. “I’m proud to join my colleagues in this effort to protect people from the criminal activity that unregulated crypto use has enabled. This bipartisan legislation will establish safeguards to ensure crypto use is met with strong standards to keep Americans safe.”  

“The Treasury Department is making clear that we need new laws to crack down on crypto’s use in enabling terrorist groups, rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks,” said Senator Warren. “I’m glad that five new senators are joining the fight to take action, including three members of the Banking Committee – our bipartisan bill is the toughest proposal on the table cracking down on crypto’s illicit use and giving regulators more tools in their toolbox.” 

“The lack of basic legal safeguards around crypto opens up Americans to countless risks. What’s more, crypto has become the payment method of choice for terrorist organizations, drug cartels, and authoritarian regimes in order to fund their illicit activities,” said Senator Van Hollen. “Crypto should be governed by the same transparency rules as traditional banks to protect Americans and help ensure it isn’t used to facilitate illegal behavior by criminal enterprises and rogue nations.”

“We have safeguards for banks to protect everyone from crime and terrorism. Crypto should have similar safeguards,” said Senator Hickenlooper. “These reforms will protect safe, transparent innovation.”

This bill has been endorsed by Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs’ Association, AARP, National Consumer Law Center (on behalf of its low-income clients), and National Consumers League.

“BPI supports bipartisan efforts to help crack down on money laundering and believes this measure is an important step in that direction,” said the Bank Policy Institute. “The existing anti-money laundering and Bank Secrecy Act framework must account for digital assets, and we look forward to engaging in this process to defend our nation’s financial system against illicit finance in all its forms.”

The Digital Asset Anti-Money Laundering Act has been cosponsored by Senators Roger Marshall (R-Kan.), Joe Manchin (D-W.Va.) Lindsey Graham (R-S.C.), Gary Peters (D-Mich.), Chair of the Senate Homeland Security and Governmental Affairs Committee, Dick Durbin (D-Ill.), Chair of the Senate Judiciary Committee, Tina Smith (D-Minn.), Angus King (I-Maine), Jeanne Shaheen (D-N.H.), Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), Michael Bennet (D-Colo.), Catherine Cortez Masto (D-Nev.), Sheldon Whitehouse (D-R.I.), and John Fetterman (D-Pa.).

The Digital Asset Anti-Money Laundering Act would: 

• Extend Bank Secrecy Act (BSA) responsibilities, including Know-Your-Customer requirements, to digital asset wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions. 
• Address a major gap with respect to “unhosted” digital wallets – which allow individuals to bypass AML and sanctions checks – by directing FinCEN to finalize and implement its December 2020 proposed rule, which would require banks and money service businesses (MSBs) to verify customer and counterparty identities, keep records, and file reports in relation to certain digital asset transactions involving unhosted wallets or wallets hosted in non-BSA compliant jurisdictions. 
• Direct FinCEN to issue guidance to financial institutions on mitigating the risks of handling, using, or transacting with digital assets that have been anonymized using digital asset mixers and other anonymity-enhancing technologies.  
• Strengthen enforcement of BSA compliance by directing the Treasury Department to establish an AML/CFT compliance examination and review process for MSBs and other digital asset entities with BSA obligations and directing the Securities and Exchange Commission and Commodity Futures Trading Commission to establish AML/CFT compliance examination and review processes for the entities they regulate. 
• Extend BSA rules regarding reporting of foreign bank accounts to include digital assets by requiring United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service. 
• Mitigate the illicit finance risks of digital asset ATMs by directing FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of the kiosks they own or operate and verify customer and counterparty identity.

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