Chamber’s Congressional Briefing Provides Insight into Blockchain & AML Challenges & Opportunities
October 23, 2019
This week, the Chamber of Digital Commerce brought together experts from across the industry and government to discuss the application of laws aimed at the prevention of money laundering with virtual currencies and how blockchain technology is being used to combat illicit finance. Congressman Bill Foster, co-chair of the Congressional Blockchain Caucus, kicked off the session describing his work educating other policymakers about the technology, how different cryptocurrencies maintain their own unique characteristics, and how some have varying levels of traceability that can be helpful to law enforcement. “It is really important that we empower agencies like FinCEN and the FBI with the tools that they need to combat illicit financing, without crimping the revolutionary applications of blockchain,” he said.
The panel included Amy Davine Kim, chief policy officer, Chamber of Digital Commerce; Kevin O’Connor, compliance and enforcement officer, the U.S. Department of Treasury, Financial Crimes Enforcement Network (FinCEN); John Roth, chief compliance and ethics officer, Bittrex; Michelle Bond, global head of government relations, Ripple; and David Jevans, chief executive officer, CipherTrace.
Following are key insights from the discussion:
The cryptocurrency landscape in the United States is well-regulated. The U.S. federal government as well as almost every state regulate the transfer of cryptocurrencies. John Roth, former special counsel for international money laundering policy at the U.S. Department of Justice as well as inspector general at the Department of Homeland Security, explained that states not only impose state licensing requirements on money transmission but also regularly borrow from federal anti-money laundering rules. Kevin O’Connor discussed FinCEN’s role in regulating cryptocurrency transactions at the federal level, which have been in place since 2011. David Jevans shared his thoughts on the efforts of the Financial Action Task Force (FATF) in creating international guidelines for cryptocurrencies.
Blockchain has enormous potential for business and law enforcement to detect and trace criminal activity. Amy Kim noted that Bitcoin and blockchains aided law enforcement; for example, the Department of Justice recently successfully used Bitcoin to bring down a major dark web child sexual exploitation site. John Roth described how the Blockchain Alliance, an initiative co-founded by the Chamber, as well as industry, work to aid law enforcement in this area.
Law Enforcement Will Be Employed When Necessary. Kevin O’Connor reminded the audience of FinCEN’s action against BTC-e for not having the appropriate AML controls in place when dealing with U.S. customers. “Our message to exchanges that offer these kinds of cryptocurrencies is that you have to have controls in place to mitigate the risks…,” he said.
Download the Chamber’s report “Understanding Digital Tokens: Guidelines for Anti-Money Laundering Compliance and Combatting the Financing of Terrorism” for the Chamber’s thought leadership on this topic.