Table of Contents

• A Sweeping Move
• Illicit Actors Use Mixing Services 
• Restrictions On Dealing With Mixers 

The US Department of the Treasury has called for a crackdown on crypto mixers as they look to classify them as a “money laundering threat.” 

The proposal was issued as the financial crimes unit looks to deter the illicit use of crypto to finance terrorist organizations. 

A Sweeping Move

The move by the US Treasury is a stance they have never taken before and could have significant ramifications. The proposal to label crypto mixers as a primary money laundering concern is part of its efforts to combat the use of crypto to finance illicit activities. It highlighted examples of several terrorist organizations that have benefited from anonymous crypto funds, including possibly Hamas. In a press release, the FinCen stated, 

“Today, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) that identifies international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern. This NPRM highlights the risks posed by the extensive use of CVC mixing services by a variety of illicit actors throughout the world.”

The Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a notice of proposed rulemaking on Thursday. This will be open to public comments for a period of 90 days. Speaking about the move, Wally Adeyemo, Deputy Secretary of the Treasury, said, 

“Today’s action underscores Treasury’s commitment to combatting the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cyber criminals, and terrorist groups. More broadly, the Treasury Department is aggressively combatting illicit use of all aspects of the CVC ecosystem by terrorist groups.”

Illicit Actors Use Mixing Services 

FinCEN has stated that mixing services are used by several illicit actors across the world. These services allow users to conduct transactions anonymously. The agency added that the proposal is critical in the ongoing efforts to boost transparency in the crypto space. The Biden administration and the Treasury Department have come under pressure from lawmakers to tackle the use of crypto in illegal activities and terrorism. 

FinCEN Director Andrea Gacki has noted that this has been the agency’s first use of its power to target primary money laundering concerns on a whole class of transactions. 

“CVC mixing offers a critical service that allows players in the ransomware ecosystem, rogue state actors, and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains. This is FinCEN’s first-ever use of the Section 311 authority to target a class of transactions of primary money laundering concern, and, just as with our efforts in the traditional financial system, Treasury will work to identify and root out the illicit use and abuse of the CVC ecosystem.”

Restrictions On Dealing With Mixers 

If the designation is made, the Treasury Department will be able to impose restrictions on dealings between financial firms based in the US, with crypto mixers. These can range from requiring additional due diligence and special attention when it comes to specific account transactions among US financial institutions. This can help prohibit opening or maintaining any correspondence payable through accounts. 

“Written comments to the NPRM may be submitted within 90 days of publication of the NPRM in the Federal Register.”

Following the comment period, the agency will review the input before advancing a final rule. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.