A U.S. Treasury official has voiced concerns regarding crypto in illicit finance to the House Financial Services Committee, asking for more authority to go after bad actors. This concern was made known in testimony before a congressional hearing set for Feb. 14.

The agency is asking  for better laws and more support to address these challenges effectively. Brian Nelson, the Treasury’s Under Secretary for Terrorism and Financial Intelligence, emphasized this request in his prepared statement for a congressional hearing on terrorism and cryptocurrency crimes.

Nelson’s statement coincides with increased attention from Washington lawmakers, including Sen. Elizabeth Warren, who has been pushing for her anti-money laundering bill. The Digital Asset Anti-Money Laundering Act (DAAMLA), which Sen. Warren reintroduced to the U.S. Senate in July 2023 , explicitly targets illicit uses of crypto assets for money laundering and financing terrorism.

Looking forward to discussing Treasury’s busy month of action to protect the U.S. financial system from illicit finance. https://t.co/sH9jHycPBY

— Under Secretary Brian Nelson (@UnderSecTFI) February 13, 2024

The Treasury has been working for the past decade on a framework aimed at combating the financing of terrorism that “mitigates illicit finance risks while promoting responsible innovation,” Nelson said in his prepared testimony.

However, the Treasury does have tools to address some issues, including allowing authorities to hold accountable firms that don’t comply with the Bank Secrecy Act, which imposes specific requirements on financial institutions to help prevent and detect money laundering and other financial crimes. Nelson said:

“… to root out illicit finance by players in virtual asset markets and forums, we need additional tools and resources. That is why we are eager to work with Congress to adopt common-sense reforms that update our tools and authorities to match the evolving challenges we face today.”

Related: Blockchain Association calls out Elizabeth Warren’s legislation on digital assets

In 2023, the Treasury Department shared suggestions with legislators to expand its powers , including proposing new sanctions tools to address wrongdoers in the cryptocurrency space. The Treasury also emphasized the need for increased supervision of stablecoins, although these were not explicitly mentioned in Nelson’s testimony.

Nelson’s comments follow the recent publication of the Treasury’s 2024 National Risk Assessments on Money Laundering , Terrorist Financing, and Proliferation Financing. These assessments pointed out threats and risks related to illicit finance in the U.S., including the cryptocurrency sector. The reports emphasized that while drug laundering is mainly done with cash, there is a growing trend of bad actors using virtual assets.

The digital assets-focused panel of the House Financial Services Committee is set to conduct a hearing on Feb. 15, explicitly addressing cryptocurrency and illicit activities.

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