US Treasury Department Cracks Down on Terrorist Financing Laws
The US Treasury Department has been at the forefront of efforts to combat terrorist financing and money laundering, releasing several reports and action plans aimed at disrupting illicit financial activities.
National Strategy for Combating Illicit Finance
According to the department’s latest national strategy, the 2024 National Illicit Finance Strategy for Combatting Terrorist and Other Illicit Financing, the US government is committed to addressing key illicit finance threats including:
- Large-scale fraud schemes
- Ransomware attacks
- Opioid-driven overdose epidemics
- Foreign and domestic terrorist attacks
- Corruption
DeFi Illicit Finance Risk Assessment
The Treasury Department has also published its first-ever illicit finance risk assessment on decentralized finance (DeFi), highlighting vulnerabilities in DeFi services that allow actors like the Democratic People’s Republic of Korea, cybercriminals, ransomware attackers, thieves, and scammers to transfer and launder their illicit proceeds.
Recommendations for Mitigating Illicit Finance Risks
The report includes recommendations for US government actions to mitigate the illicit finance risks associated with DeFi services, including:
- Strengthening AML/CFT regulatory supervision
- Considering additional guidance for the private sector on DeFi services’ AML/CFT obligations
- Assessing enhancement to address any AML/CFT regulatory gaps related to DeFi services
Countering Ransomware Financing
The Financial Action Task Force (FATF) has released a report analyzing methods used by criminals to carry out ransomware attacks and how payments are made and laundered. The report proposes actions that countries can take to more effectively disrupt ransomware-related money laundering, including:
- Implementing FATF recommendations for virtual assets and virtual asset service providers
Russia Suspended from Financial Action Task Force
The FATF has taken the unprecedented step of suspending Russia’s membership due to its unlawful, immoral, and unprovoked war against Ukraine. This move is a significant blow to Russia’s financial system and marks a major victory for global efforts to combat terrorist financing and money laundering.
Action Plan to Address Illicit Financing Risks of Digital Assets
The Treasury Department has released an action plan aimed at mitigating the illicit finance and national security risks associated with digital assets. The plan includes priority actions on:
- Monitoring risks
- Working with international partners to improve implementation of AML/CFT standards
- Strengthening domestic regulations and operational frameworks
- Enhancing private sector compliance and information sharing