US Treasury official calls for global cryptocurrency regulation
Sigal Mandelker said there is a lack of consistency worldwide in respect of anti-money laundering and combatting the financing of terrorism regulations
What has happened?
The US Treasury Under Secretary has called for the international community to strengthen virtual currency frameworks.
What does this mean?
In a speech before the Securities Industry and Financial Markets Association Anti-Money Laundering & Financial Crimes conference, Sigal Mandelker called for stronger regulation around cryptocurency.
Taking Venezuela as an example, and its recent plans to introduce a "petro" digital currency to try to sidestep sanctions, Mandelker said that criminals, rogue regimes, terrorist groups and others are using cryptocurrencies to find ways around governments' control "to exploit the financial system".
She then explained that her department, through FinCEN, regulates virtual currency exchangers as money transmistters and also uses enforcement powers "to target those who fail to live up their responsibilities".
It also works in partnership with various offices, such as the Inland Revenue Service, as well as the US Securities and Exchange Commission and the Commodity Futures Trading Commission to ensure that compliance with anti-money laundering (AML) and combatting the financing of terrorism (CFT) regulations.
However, there is a lack of consistency worldwide in respect of AML and CFT regulations.
"The lack of AML/CFT regulation of virtual currency providers worldwide greatly exacerbates virtual currency’s illicit financing risks. Currently, we are one of the only major countries in the world, along with Japan and Australia, that regulate these activities for AML/CFT purposes. But we need many more countries to follow suit, and have made this a priority in our international outreach, including through the Financial Action Task Force."
Mandelker encouraged the compliance community to "supercharge" their efforts to help fight financial crime and threats to national security.
The first point of action is to ensure that compliance programmes are "airtight".
She the listed some of key indicators her office reviews when evaluating a company's compliance programme, such as a strong culture of compliance and having clear policies.
She added that companies should take additional steps to make financial systems more secure, such as "strive to understand the developing nature of the sanctions and anti-money laundering regimes" and being proactive with compliance programmes.
She also said companies must "do more" against money laundering and terrorism financing in countries, such as North Korea, that are subject to sanctions.
"You play a key role in countering the threats that we face,"Mandelker told the audience.
"The expectations you set for your customers, counterparties, and the countries in which you operate are critical to ensuring the transparency of the international financial system and keeping bad actors out. While at Treasury we set standards and enforce laws and regulations, you in the private sector magnify our efforts by holding those you do business with to account."
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