ICBA: Detecting illicit activity involving digital assets requires bigger effort

ICBA told the Treasury Department that community banks remain open to exploring the potential capabilities of payment stablecoins, but their promise rests on the government’s ability and willingness to deter the skyrocketing growth of illicit finance in the digital economy.

Details: Responding to Treasury’s request for comment on innovative methods to detect illicit activity involving digital assets, ICBA said that while most community banks do not have direct engagement with crypto products and services:

• The North Korean military is the most significant threat actor in crypto, demanding a U.S. government response focused on deterrence rather than detection.

• Amid skyrocketing crypto scams, even strong actions by FinCEN have limited success due to the capabilities provided by a decentralized crypto ecosystem and wide gaps in global regulation and law enforcement.

• The administration should finalize FinCEN’s ICBA-supported proposal to combat crime enabled by cryptocurrency mixers as quickly as possible.

Recent Actions: The Treasury and Justice departments last week announced several actions against criminal networks responsible for scams and money laundering, including an ICBA-supported final rule targeting the Cambodia-based Huione Group.

ICBA Advocacy: ICBA in June strongly supported FinCEN’s proposed rule to designate the Huione Group as a primary money laundering concern but said more needs to be done to curtail the rapid growth of crypto scams. Last week’s final rule notes that ICBA was the only voice of support.