Finance

Democrats press Treasury over concerns Russia could use cryptocurrency to evade sanctions

Democrats are pressing the Treasury Department for information around its plans to enforce sanctions compliance within the cryptocurrency industry as concerns rise over whether Russia could use digital assets to get around U.S. sanctions issued in response to its recent invasion of Ukraine.

Sen. Elizabeth Warren (D-Mass.), Senate Intelligence Committee Chairman Mark Warner (D-Va.), Senate Banking, Housing and Urban Affairs Chairman Sherrod Brown (D-Ohio), and Senate Armed Services Committee Chairman Jack Reed (D-R.I.) led lawmakers in a letter to the agency on Wednesday.

In the letter, lawmakers inquire about the agency’s “progress in monitoring and enforcing sanctions compliance by the cryptocurrency industry,” before going on to voice concerns “that criminals, rogue states, and other actors may use digital assets and alternative payment platforms as a new means to hide cross-border transactions for nefarious purposes.”

The group then cited the agency’s 2021 Sanctions Review and other reports that have “warned that such digital assets and alternative payment platforms may facilitate evasion of U.S. and global sanctions, potentially undermining the efficacy of our sanctions regime.”

Those concerns, the lawmakers wrote, have become more urgent in light of the spate of sanctions the Biden administration slapped on Russia over its ongoing invasion, while also pointing to a recent story published by The New York Times, in which experts warned of “cryptocurrency tools” that Russian companies could employ to circumvent sanctions.

Among the questions lawmakers are pressing the agency for answers to by March 23 include how its Office of Foreign Assets Control (OFAC) will work “with foreign governments and other participants in the international banking community to ensure that cryptocurrency is not used to evade sanctions,” as well as what are all of “the sanctions violations documented by OFAC in the virtual currency industry.”

Lawmakers are also asking what additional tools “might be necessary for OFAC to ensure that cryptocurrency participants are not able to help Russia or other malign actors evade U.S. and multilateral sanctions.”

The Hill has reached out to the Treasury Department for response to the letter. 

“It’s been clear that drug traffickers, ransomware, crooks and tax cheats all use crypto because it’s a way to move money around without the authorities being able to track it,” Warren told The Hill shortly after the letter was released on Wednesday.

“So the question is, how does the Treasury assess the risk and what are they doing about it?” she added. “And that’s why we’re pushing right now on Treasury.”

Tags Elizabeth Warren Jack Reed Mark Warner Sherrod Brown

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