Senators Elizabeth Warren and Roger Marshall of the United States are introducing legislation to prohibit the use of cryptocurrencies for money laundering and the financing of terrorism and rogue states.
The Digital Asset Anti-Money Laundering Act, if it passes into law, would impose know-your-customer (KYC) requirements on crypto industry participants like wallet providers and miners and forbid financial institutions from dealing with digital asset mixers, which are instruments used to obfuscate the source of funds.
Additionally, the act would permit the Financial Crimes Enforcement Network (FinCEN) to put into effect a proposed rule requiring institutions to report specific transactions involving unhosted wallets, which are wallets in which the user has absolute ownership over the contents instead of depending on an exchange or other third party.
Moreover, the bill mandates that the Securities and Exchange Commission (SEC) must create a special risk-focused examination and review process for entities it regulates in order to determine the effectiveness of anti-money laundering programmes, the sufficiency of reporting requirements, and compliance with anti-money laundering and anti-terrorist financing regulations.
Legislators and regulators routinely raise concerns about the use of cryptocurrencies to aid in money laundering and the financing of terrorism, and they usually exploit these concerns to underline the need for more stringent regulation of the digital asset market.
