financialservices.house.gov

Cmte Financial Services (R)
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Combatting the Illicit Use of Virtual Currencies

Washington, Jun 20 -

The Subcommittee on Terrorism and Illicit Finance met today to examine the problems law enforcement agencies encounter in their efforts to address the illicit funding potential of virtual currencies (VCs).

“Today’s hearing was an excellent opportunity to learn more about the illicit use of virtual currencies and what we can do to combat the abuse of virtual currencies on Dark Web marketplaces for criminal and terrorist activity. I greatly enjoyed hearing from our expert witnesses today on potential solutions and look forward to continuing work with my colleagues to reinforce our law enforcement’s ability to detect bad actors,” said Subcommittee Chairman Steve Pearce (R-NM).

Key Takeaways

• While the majority of VC transactions are legitimate business transactions, the allure of perceived anonymity, ease of transacting across any distance and speed of resolution at low cost make VCs very attractive to criminals and terrorists.
• Law enforcement has identified an uptick in criminal and terrorist exploitation of VCs to raise funds and launder money.
• We need to equip law enforcement to respond to the rising use of VCs and the popularity of these methods to transfer money anonymously.

Topline Quotes from Witnesses

“The pseudo-anonymity and ease of transfer cryptocurrency provides have led to expanded use by traditional criminal organizations with ample opportunity for expansion as it becomes more mainstream… Technology will inevitably continue to evolve, and law enforcement agencies everywhere must continue to adapt and evolve as well… We will continue to use our unique and powerful combination of law enforcement authorities and access to information to close vulnerabilities that can be exploited to harm our homeland in the real and virtual worlds.” – Gregory Nevano, Deputy Assistant Director, Illicit Trade, Travel, and Finance Division, Homeland Security Investigations

“In recent years, criminals have increasingly used digital currencies to facilitate illicit activities on the Internet... Digital currencies have the potential to support more efficient and transparent global commerce, and to enhance U.S. economic competitiveness. However, because digital currencies continue to be used to facilitate illicit activity, law enforcement must adapt our investigative tools and techniques to dismantle criminal groups that use these instruments for fraudulent activity or money laundering… Those that seek to further their illicit activities through use of digital currencies should have no illusions that they are beyond the reach of the law.” – Robert Novy, Deputy Assistant Director, Office of Investigations, United States Secret Service

“Fundamentally, we must maintain the integrity and accessibility of the global financial system and protect it from abuse… As strong as our AML/CFT framework is, malicious actors will continue to attempt to exploit any vulnerability to move their illicit proceeds undetected through legitimate financial channels, in order to hide, foster, or expand the reach of their criminal or terrorist activity... As we continue to see technology evolve and integrate into the U.S. and global financial system, we must ensure that it does so in a way that allows for the transparency needed to protect the financial system.” – Thomas Ott, Associate Director, Enforcement Division, Financial Crimes Enforcement Network