Speaking at a financial sector innovation policy roundtable, the former Federal Reserve Chair and the current U.S. Treasury Secretary Janet Yellen warned that cyberattacks and digital currency-related crimes were on the rise. “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. The Treasury Secretary said the existing regulatory framework was created in the 1970s and has not been updated much since.
The U.S. government needs to update its AML/CFT laws.
Janet Yellen 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. “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. Regulators around the world are showing concern over the use of crypto in terrorism as the industry continues to become more mainstream.
Janet Yellen said crypto use in terrorism was “a particular concern.”
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.” However, in later written remarks, she softened her tone, saying cryptocurrencies could be beneficial to the existing financial system as well. Treasury Secretary’s remarks come a week after the United Nations (UN) published a report saying cryptocurrencies have been used to finance terrorist organizations, including ISIS and Al-Qaeda.