House Passes Bill To Establish Independent FinTech Working Group Feat. CIA, DHS

A Bill to establish an "Independent Financial Technology Working
Group to Combat Terrorism and Illicit Financing" has passed the House, known as the "Financial Technology Protection Act of 2023". The group shall issue reports on the use of financial technologies in terrorism and "illicit financing" and is directed to produce legislative and regulatory proposals to counter the identified risks.

The group underlies the control of the Secretary of the Treasury – It is chaired by the Undersecretary for Terrorism and Financial Intelligence, seating senior representatives from FinCEN, the IRS, OFAC, the FBI, DEA, the Department of Homeland Security and the Secret Service, the Department of State, and the CIA. The Undersecretary will further appoint five representatives of financial technology companies, blockchain intelligence, financial institutions, institutions or organizations engaged in research, and institutions or organizations focused on privacy and civil liberties.

According to the Bill, the group shall report on "the potential uses of digital assets and other related emerging technologies by States, non-State actors, foreign terrorist organizations, and other terrorist groups to evade sanctions, finance terrorism, or launder monetary instruments, and threaten the national security of the United States". The group shall make legislative proposals to prevent the evasion of sanctions and the facilitation of financial crime through digital assets and "related emerging technologies".

Describing the need for the legislation, representatives argue that the Financial Technology Protection Act would "provide a forum for engagement between federal law enforcement and intelligence professionals, and private sector technologists and researchers" citing the Treasury Department's 2022 Action Plan to Address Illicit Financing Risks of Digital Assets, which established the need for public-private cooperation as a priority action item.

While it is stated on background that National Risk Assessments place the use of digital assets for money laundering activity "far below that of fiat currency and more traditional methods", and that "rates of illicit activity remain low in the digital asset ecosystem", "bad actors may seek to use digital wallets, mixers, and digital asset trading platforms to transact and obfuscate the movements of digital assets".

The Bill's primary concerns lie "with digital asset platforms that have 'substantially deficient' anti-money laundering programs that operate outside of the U.S.". It is stated that "law enforcement bodies around the world have struggled to keep pace with emerging trends and types of crime in the ecosystem", but "the immutability and transparency of blockchain networks can provide law enforcement with a unique insight into the movement of illicit funds".

In a related hearing conducted by the Subcommittee on National Security, Illicit Finance, and International Financial Institutions in April 2023, FinCEN emphasized the need to combat Russian sanctions evasion as well as the use of ransomware attacks by foreign state actors to finance military operations via cryptocurrency. Congressman Ogles of Tennessee questioned how agencies would prioritize the collection and analysis of data relating to foreign actors to distinguish it from the 350 million records collected "primarily on innocent Americans" in light of increasing data collection through AML/CFT regulations.

The Bill passed the House with 50 ayes to 0 nays.

Independent journalism does not finance itself. If you enjoyed this article, please consider donating to our Geyser Fund.