The U.S. Treasury Department has released its 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing, revealing that despite the increasing inclination of illicit actors towards cryptocurrencies for money laundering and financing, traditional cash remains their preferred tool.
This comprehensive assessment by the Treasury delves into the multifaceted landscape of threats, vulnerabilities, and risks associated with illicit finance within the United States.
Highlighting the evolving landscape, the report acknowledges the growing threat posed by digital assets, even as fiat currencies continue to be the primary medium for money laundering and terrorist financing.
Money Laundering (Credits: CryptoPotato)
The 2024 National Money Laundering Risk Assessment identifies fraud, particularly in investment schemes and healthcare fraud, as the leading cause of money laundering.
Notably, there is an upswing in fraudulent activities leveraging technological advancements, such as telemedicine, and scams related to virtual asset investments.
The report draws attention to a concerning trend where terrorist groups like ISIS and Hamas are increasingly turning to virtual assets for funding.
The utilization of cryptocurrencies by these groups, including the specific instance of Hamas leveraging crypto as a financing tool before attacks in Israel, has prompted heightened concerns among lawmakers.
Financial interactions between individuals in the U.S. and foreign terrorist organizations often involve direct solicitation of funds or attempts to transfer funds.
While cash, registered money services businesses, and virtual assets are employed in these transactions, the report underscores the shifting landscape toward the use of virtual assets.
The Treasury underscores the challenges posed by decentralized finance (DeFi), categorizing DeFi services as financial institutions under the Bank Secrecy Act (BSA).
Despite regulatory obligations for compliance with anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations, the Treasury identifies a significant compliance shortfall among many DeFi services. This regulatory gap is exploited by illicit actors, adding another layer of complexity to the fight against illicit finance.
The report emphasizes criminals’ interest in exploiting emerging financial services, particularly DeFi platforms and online gaming. It raises concerns about the anonymity offered by online gaming, coupled with the substantial size and rapid growth of the sector, introducing unique money laundering risks.
Additionally, the Treasury expresses apprehensions about the increased use of stablecoins, marking a departure from the 2022 National Terrorist Financing Risk Assessment, where terrorist groups predominantly solicited donations in Bitcoin.
Deputy Secretary of the Treasury Wally Adeyemo has previously voiced concerns, particularly focusing on dollar-based stablecoins outside the United States, drawing attention to the heightened regulatory scrutiny surrounding these digital assets.
In essence, the 2024 National Risk Assessments illuminate the evolving landscape of illicit finance, encompassing the persistent use of traditional cash and the escalating challenges posed by digital assets, DeFi, online gaming, and the proliferation of stablecoins.
