House Passes Bill to Update Money Laundering Crypto Enforcement

By Jacob Rund

The Treasury Department’s anti-money laundering enforcement unit could soon see an update to its duties after the House advanced legislation aimed at prioritizing its focus on cryptocurrencies and other emerging technologies.

The FinCEN Improvement Act (H.R. 6411), which passed Sept. 12 on a voice vote, would add language to the Financial Crimes Enforcement Network’s governing law that requires it to coordinate with other countries’ financial intelligence units on cryptocurrency-related initiatives.

It would also add tribal law enforcement groups to the list of “partners” with whom FinCEN is tasked with working to combat money laundering and other activities that fund terrorism and organized crime. Those partners, according to U.S. code, include “federal, state, local, and foreign” law enforcement and regulatory authorities.

The bill “is an important step in modernizing FinCEN and ensuring our law enforcement and intelligence communities can detect and prevent criminals and terrorist networks from using virtual currencies” for money laundering and cyberwarfare, Rep. Ed Perlmutter (D-Colo.) said in July when the bill was introduced.

Rep. Steve Pearce (R-N.M.) joined Perlmutter in sponsoring the legislation.

Redundant?

“It’s an insult to small potatoes everywhere,” Ross Delston, a Washington attorney and anti-money laundering expert witness, said of the bill. It would give FinCEN authority that it already has to deal with activities involving cryptocurrency, he told Bloomberg Law.

FinCEN officials have stated that they will go after criminals using bitcoin and other virtual currencies to launder money and avoid the traditional financial system.

“As far as coordinating with tribal authorities, while that could in theory be an issue, it’s not going to come up an awful lot,” Delston said. “It’s a really minor issue.”

Regardless of these complaints, the bill passed with bipartisan support.

The bill, in addition to its language on cryptocurrencies and tribal law enforcement, contains a provision that would require FinCEN to support activities that protect against “terrorism,” rather than “international terrorism” as U.S. code now states.

Another Bill Coming

Another bill targeted at FinCEN’s information sharing and collaborative efforts will be considered this week. Financial Services Committee members plan to vote Sept. 13 on the 2018 FinCEN Modernization Act (H.R. 6721), which would instruct the bureau to create and maintain “research, development, and information sharing programs.”

It would allow FinCEN to enter into transactions with other government agencies, states, and “any agency or instrumentality” of the United States that furthers the goals of information sharing and developing new technologies. The bureau could also solicit and accept gifts from these parties.

The bill could provide an inside track for vendors to avoid the normal procurement process and land a government contract by offering cash or “in kind” gifts, Delston said.