US says some crypto firms are neglecting to stop illicit finance flows

The U.S. said some firms in the digital asset sector are not doing enough to stop the flow of illicit finance to terrorist organizations.

Speaking at the Royal United Services Institute in London on Friday U.S. Deputy Treasury Secretary Wally Adeyemo said his department is engaging with financial institutions and digital asset firms, "on steps they can take to prevent terrorists from being able to move money."

However, he added that some firms in the digital asset space "wish to innovate without regards to its consequences, including protecting against illicit finance."

"Our expectation is that financial institutions and digital asset companies and others in the virtual currency ecosystem will take steps to prevent terrorists from being able to access resources. If they do not act to prevent illicit financial flows, the United States and our partners will," he added.

Adeyemo added that the U.S. "will use every tool available" in its efforts to target platforms that facilitate the movement of resources for terrorists.

U.S. sanctions after the Hamas attacks

On Friday the U.S. issued a second round of sanctions against Hamas, including the targeting of a Hamas official in Iran and members of Iran's Islamic Revolutionary Guard Corps.

The move follows last week's sanctions focused on disrupting funding for the militant group, following its attack earlier this month on communities in southern Israel.

Officials in the U.S. called for a crackdown on the use of cryptocurrency to fund terrorism and evade sanctions in the wake of the attacks. On Thursday, Senate Banking Committee Chair Sherrod Brown, D-Ohio, said crypto platforms often do not use the "same common-sense protections," such as know your customer rules, that keep illicit finance away from traditional sectors.

"Some crypto services and tokens even help users keep their transactions anonymous and when law enforcement attempts to trace or block crypto funds, it becomes a game of whack a mole," Brown said during a Senate hearing.

His comments came as the crypto industry has argued that recent figures being used to portray the scale of crypto fundraising by terrorist groups are being taken out of context.