WASHINGTON—The U.S. Department of Treasury is intensifying its efforts against "evolving threats," including the potential for virtual currencies to be used for money laundering and to finance other criminal activities.
Testifying before the U.S. Senate Banking, Housing and Urban Affairs Committee, Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker, said that criminals seek out vulnerabilities in the global financial system, including by using emerging technologies such as virtual currencies "to launder their ill-gotten gains and advance their malicious enterprises." Since criminals cannot operate without funding, putting in place a strong AML/CFT regime is key in order to identify and disrupt illicit activities, she added, according to Lexology.
"The effectiveness of this structure depends on compliance by the regulated entities, and so we aggressively pursue virtual currency exchangers and others who do not take these obligations seriously," she said.
Mandelker said that the Treasury Department's Financial Crimes Enforcement Network (FinCEN) had engaged with and examined several virtual currency providers and exchangers, Lexology reported.
She then described some of the government’s enforcement actions against exchanges, such as the closure and fine of BTC-e, a foreign-located virtual currency exchanger, which at the time was one of the largest virtual currency exchanges by volume in the world.
As a part of its action, FinCEN also fined one of BTC-e’s operators, Aleksander Vinnik, a Russian national, Lexology noted.
“This action sends a very powerful message that we will hold accountable virtual currency exchangers that violate our AML laws, wherever they are located. We will do so in conjunction with our law enforcement partners and foreign counterparts,” Mandelker said.