Cryptocurrencies used for illicit purposes are a “growing problem,” Treasury Secretary Janet Yellen said on Wednesday.
“I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug dealers; they have been a tool for financing terrorism, ”she said in her opening speech.
She referred to the Anti-Money Laundering Act passed by Congress last December, a part of the National Defense Authorization Act that requires the United States government to update its anti-money laundering / terrorist financing laws (ABC / CFT). Yellen said the existing regulatory framework was created in the 1970s and has not been much updated since.
“The update couldn’t have come at a better time. As this group knows very well, we live in an explosion of risks related to fraud, money laundering, terrorist financing and data privacy, ”she said.
This is the third time that Yellen has spoken publicly about cryptography this year. During her confirmation hearing in January, she told the Senate Finance Committee that the use of cryptography in terrorism was “a particular concern”. In subsequent written comments, she softened the tone, saying that cryptocurrencies could also be beneficial to the existing financial system.
Yellen’s comments come a week after the United Nations (UN) published a report saying that cryptocurrencies were used to fund ISIS and al-Qaeda.
This report referred to law enforcement actions in France and the United States. Last September, French police arrested 29 individuals accused of facilitating a complicated scheme to finance terrorists using cryptocurrency coupons.
Earlier this year, the United States Department of Justice announced that it had dismantled three separate campaigns to finance al-Qaeda, Hamas and ISIS that used cryptocurrencies.
US lawmakers are also asking whether the streaming encryption platform DLive, a subsidiary of BitTorrent and the Tron Foundation, was used to facilitate crypto donations to individuals present in the insurgency.
The Treasury Department, alongside regulatory agencies under its umbrella, “may better contain the flow of dark money,” said Yellen on Wednesday.
“And we will be better positioned to prevent adversaries from hacking our institutions or interfering with our elections,” she added.