Cryptocurrencies used for illicit purposes are a “growing problem,” Treasury Secretary Janet Yellen said Wednesday.
“I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism,” she said in her opening remarks.
She referenced the Anti-Money Laundering Act passed into law by Congress last December, a part of the National Defense Authorization Act that requires the U.S. government to update its anti-money laundering/countering the financing of terrorism (AML/CFT) laws. Yellen said the existing regulatory framework was created in the 1970s and has not been updated much since.
“The update couldn’t have come at a better time. As this group knows very well, we’re living amidst an explosion of risk related to fraud, money laundering, terrorist financing, and data privacy,” she said.
This is the third time Yellen has spoken in public about crypto this year. During her confirmation hearing in January, she told the Senate Finance Committee that crypto use in terrorism was “a particular concern.” In later, written, remarks, she softened her tone, saying cryptocurrencies could be beneficial to the existing financial system as well.
Yellen’s remarks come a week after the United Nations (UN) published a report saying cryptocurrencies have been used to finance ISIS and Al-Qaeda.
That report referenced law enforcement actions in France and the U.S. Last September, French police arrested 29 individuals accused of facilitating a complicated scheme to fund terrorists using cryptocurrency coupons.
Earlier in the year, the U.S. Department of Justice announced it had dismantled three separate campaigns to finance Al-Qaeda, Hamas and ISIS that used cryptocurrencies.