US Treasury Official Pushes for Worldwide Cryptocurrency Regulation Against ‘Kleptocrats and Criminals’

Demands ‘stiff penalties’ against non-complying companies, individuals.


In a speech regarding cryptocurrency, Sigal Mandelker, the under secretary for terrorism and financial intelligence for the US Department of the Treasury, pushed for stronger regulations on the digital asset class for the safety of the financial system and national security.

According to Coindesk, Mandelker addressed how terrorists and other criminals have utilized cryptocurrency to “exploit the financial system,” “hide their ill-gotten gains,” and “finance their illicit activities.”

“Kleptocrats and criminals are also attempting to find new ways around our controls to exploit the financial system.  In recent years, we’ve seen terrorist groups, criminal organizations, and even rogue regimes like Venezuela experiment with and use digital and virtual currencies to hide their ill-gotten gains and finance their illicit activities,” she said, referencing Venezuela’s recent announcement to create its “petro” digital currency. “Recently, for example, Venezuela announced plans to create the ‘petro’ digital currency to try and sidestep our powerful sanctions, which the United States imposed on the regime for its vicious assault on human rights and the rule of law.”

In addition, she went on to tell the Securities Industry and Financial Markets Association Anti-Money Laundering and Financial Crimes Conference that there is very little to no international regulation of cryptocurrency providers and their handling of such activities.

“The lack of AML/CFT regulation of virtual currency providers worldwide greatly exacerbates virtual currency’s illicit financing risks,” she said. “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.”

As a result of these issues, Mandelker called for regulators to make haste in cracking down on regulations for the safety of cryptocurrency and its investors, especially against money laundering, terrorism financing, and other form of financial crime—many of which takes place in countries with little to no regulation.

To combat these issues and “assure compliance,” the US Treasury official pushed for “stiff penalties” for companies and individuals who refuse to play ball.

“Aggressive enforcement gives teeth to our powerful economic authorities,” she said. “Each of our actions, whether by FinCEN, OFAC, or other departments, provides an opportunity for the private sector to gain better insight into our compliance and enforcement priorities, and each action tells a story about our expectations and where that particular company fell short. “

“You play a key role in countering the threats that we face. 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,” she said.

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