Anti Money Laundering (AML), Blockchain & Cryptocurrency, Cryptocurrency Fraud
New Crypto-Based Guidelines Target Anonymous Money Laundering Activities
Dan Gunderman (dangun127) •
October 16, 2021
The US Treasury Department on Friday unveiled additional measures to tackle the illicit use of cryptocurrencies, warning companies not to engage with sanctioned entities exploiting the financial system – especially to launder ransomware proceeds. .
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Sanctions guidelines, announced by the Treasury Department’s Office of Foreign Assets Control (OFAC), effectively warn the private sector, ensuring that crypto operators do not directly or indirectly facilitate payments restricted by US sanctions. .
This follows the very first designation of a virtual currency exchange to allegedly facilitate transactions for ransomware players. Treasury officials say the guidelines outline best practices “tailored to the unique risks posed by [the] dynamic [cryptocurrency] space “(see: US Treasury blacklists Russia-based crypto exchange).
“Ransomware players are criminals who are activated by loopholes in compliance regimes across the global virtual currency ecosystem,” said Deputy Treasury Secretary Wally Adeyemo. “Treasury is helping stop ransomware attacks by preventing criminals from profiting from their crimes, but we need private sector partners to help prevent this illicit activity.”
In a statement, the department called the actions “part of the Biden administration’s targeted and integrated efforts to counter the threat of ransomware.”
Treasury officials noted on Friday that “the private sector plays a key role in implementing appropriate sanctions and combating money laundering / financing of terrorism checks to prevent sanctioned persons and other illicit actors exploit virtual currencies and undermine US foreign policy and national security interests. “
Michael Fasanello, who has held various positions within the US Department of Justice and Treasury, including the Financial Crimes Enforcement Network, or FinCEN, told Information Security Media Group: “The department’s actions today of the Treasury are not a surprise. Crypto transactions have historically been governed by the US sanctions policy administered by OFAC, as clearly stated time and again by enforcement actions and designations of persons, entities and now. blacklisted digital addresses.
Compliance with sanctions – The specifics
Published through an OFAC brochure, the guidelines say payments in virtual currency may present sanction risks – if blacklisted entities are involved.
OFAC’s guidelines apply to the virtual currency industry “in the same way they do to traditional financial institutions,” resulting in civil and criminal penalties for non-compliance, officials said.
The document continues: “OFAC encourages members of the virtual currency industry to assess their exposure to OFAC sanctions and take action to minimize their risks.
The new document, they continue, also provides examples of best practice compliance for space operators – including tech companies, exchanges, administrators, miners and wallet providers – as well as financial institutions. traditional “that can be exposed to virtual currencies”.
OFAC also declares, “[Cryptocurrency companies should] integrate geolocation tools and IP address blocking controls. Virtual currency companies with strong programs… should be able to use geolocation tools to identify and prevent IP addresses from sanctioned jurisdictions from accessing a company’s website and services for activities prohibited by government regulation. ‘OFAC. “
The document notes: “Transaction monitoring and investigation software can [also] be used to identify transactions involving virtual currency addresses or other identifying information (e.g. sender, payee, origin and payee exchanges, and underlying transactional data) associated with sanctioned persons and entities on the Specially Designated Nationals and Blocked Persons List from the Treasury, or other sanctioned lists, or located in sanctioned jurisdictions.
In its press statement, ministry officials said, “Industry participants should consider incorporating the elements and controls described in the brochure into their… compliance programs. If ignored or mismanaged, sanctions are vulnerabilities that can lead to violations and harm U.S. foreign policy and national security interests. “
Fasanello, currently Director of Training and Regulatory Affairs for Blockchain Intelligence Group, adds, “Because economic sanctions are so intimately tied to U.S. foreign policy and national security interests, enforcement measures which can cause significant damage to the economy and to the reputation of the industry. participants and their clients. This is not an area of regulatory compliance to be treated lightly.
Other federal efforts
The announcement is the latest in a series of steps the Biden administration has taken to tackle ransomware, following high-profile attacks this year that disrupted the East Coast’s fuel supply during the colonial pipeline incident; jeopardized the country’s meat supply by attacking JBS USA; and take some 1,500 downstream organizations offline with a focus on managed service provider Kaseya during the July 4 vacation.
Last month, the Treasury Department blacklisted Russia-based cryptocurrency exchange Suex for allegedly laundering tens of millions of dollars for ransomware operators, crooks and darknet markets.
In its latest issue, the department alleges that more than 40% of Suex’s transaction history has been associated with illicit actors, involving the proceeds of at least eight ransomware variants.
Likewise, this week, the White House National Security Council hosted a two-day ‘counter-ransomware’ event in 30 countries, which allowed senior officials to strategize to improve network resilience. , fight against the illicit use of cryptocurrency and strengthen law enforcement. cooperation and diplomacy. Remarkably absent from the virtual event: Russia, long considered an aggressor in cyberspace (see: US hosts global ransomware summit without Russia).
At the end of the mostly private two-day event, the White House claimed measurable progress had been made. In a statement, the administration said: “[The nations gathered at the event] recognize that ransomware is a growing threat to global security “and that it” poses a significant risk to critical infrastructure, essential services, public safety, consumer protection and privacy, and economic prosperity. “
“Together, we must take appropriate measures to counter the cybercriminal activities emanating from our own territory and to make others understand the urgency to do the same in order to eliminate the havens for the operators who carry out such disruptive and destabilizing operations”, the White House said Thursday. .