US Treasury says criminals and scammers are increasingly turning toward crypto

Quick Take

  • The US Treasury released its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing, which highlighted illicit finance threats, vulnerabilities and risks in the U.S.

Criminals, scammers and illicit actors are increasingly turning to virtual assets, the U.S. Treasury Department said in one of three national risk assessment reports published on Wednesday. 

The department released its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing, which highlighted illicit finance threats, vulnerabilities and risks in the U.S.

The department detailed how bad actors launder funds to conduct fraud, drug trafficking, human smuggling and corruption through the continued use of cash and increasingly crypto. Treasury said it plans to release a strategic plan that will share recommendations for addressing the issues in Wednesday's reports in the coming weeks. 

"While the laundering of drug trafficking proceeds is predominantly cash-based, the use of virtual assets is a growing concern for U.S. law enforcement," Treasury said in its money laundering report. 

Virtual assets have been in a flux since Treasury's 2022 report, but rebounded in the fall of 2023, the department said. Virtual asset service providers have certain anti-money laundering and countering the financing of terrorism requirements and have to abide by certain sanctions rules as well. 

Treasury defines VASPs as an exchange between virtual assets and fiat currencies, exchange between one or more forms of virtual assets, the transfer of those assets and the safekeeping, among others. Some VASPs don't comply with U.S. requirements either through saying they are not subject to the rules or not registering correctly, Treasury said. 

DeFi concerns

Decentralized finance also presents its own challenges. A DeFi service that is a financial institution under the Bank Secrecy Act has to abide by AML/CFT rules, Treasury said. 

"Despite this, many existing DeFi services covered by the BSA fail to comply with AML/CFT obligations, a vulnerability that illicit actors exploit," they said. 

Criminals are looking to exploit new financial services, including DeFi and online gaming, according to the money laundering report.

"In recent years, legal and technological developments have led to substantial growth in online gaming activity in the United States," Treasury said. "The anonymity afforded by online gaming and the size and rapid growth of this sector now present unique money laundering risks."

Hamas and other terrorist groups 

Terrorists are experimenting and adapting to changes in technology, though they still stick to what they know, Treasury said in its terrorist financing report.

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