United States Deputy Treasury Secretary Adewale Adeyemo continued to advocate for increased enforcement powers for his agency during his testimony before the Senate Banking Committee on April 9. In a hearing focused on countering illicit finance, terrorism, and sanctions evasion, Adeyemo presented three proposed reforms aimed at enhancing U.S. enforcement efforts against international wrongdoers who use cryptocurrencies.
Adeyemo built upon the proposals put forth by the Treasury Department in November. During his recent testimony, he outlined three specific changes that the department is seeking. The first is the implementation of secondary sanctions that would target “foreign digital asset providers” involved in illicit financial activities.
According to Adeyemo, while U.S. sanctions currently prohibit institutions from utilizing U.S. correspondent accounts and conducting transactions through banks, crypto exchanges and money services often operate independently from correspondent accounts. Therefore, a new secondary sanctions tool is necessary. However, Adeyemo did not provide further details on what form these secondary sanctions might take.
The second reform being sought by the Treasury is an expansion of the powers of existing authorities to encompass the digital asset ecosystem. The third reform focuses on addressing jurisdictional risks associated with offshore cryptocurrency platforms, which Adeyemo considers a significant challenge.
Adeyemo’s reference to committee member Elizabeth Warren and chair Sherrod Brown’s Digital Asset Anti-Money Laundering Act of 2022 suggests that these proposed reforms align with their legislation. Both Warren and Brown are well-known skeptics of cryptocurrencies.
Adeyemo emphasized the use of cryptocurrencies by terrorist groups, North Korea, and in the fentanyl trade as evidence of the Treasury’s need for greater enforcement powers. While acknowledging that terrorists still prefer traditional financial products and services, he expressed concern that the use of virtual assets by these actors will continue to grow unless Congress provides the necessary tools.
Prior to Adeyemo’s testimony, Banking Committee chair Sherrod Brown issued a statement in support of the Treasury Department’s enforcement goals. Ranking member Tim Scott commended the work done by the Treasury Department but focused more on foreign policy issues that he believes pose a threat to U.S. security.