Two United States senators have re-introduced an anti-money laundering (AML) bill that places greater scrutiny on crypto miners and validators.
Announced on Wednesday, Senators Elizabeth Warren and Roger Marshall returned the bill, called ‘Digital Asset Anti-Money Laundering Act of 2023’ (Bill SIL23929) focused on cryptocurrencies to the floor with the support of Senators Joe Manchin and Lindsey Graham.
This reintroduction follows their initial attempt in December, which stated that American cryptocurrency businesses should have to follow the same rules as banks when it comes to knowing their customers in an effort to prevent illegal money activities.
However, the digital advocacy group, the Chamber of Digital Commerce is against this bill. It argues that the bill could actually slow down the development of new ideas related to digital assets in the United States. The reason for its concern is that the bill requires companies in the crypto industry to meet certain regulatory requirements, which they believe could be burdensome.
The Chamber of Digital Commerce mentioned that individuals and groups involved in digital asset validation and mining usually don’t do the same things as traditional financial institutions such as offer financial services to customers like banks do, and are instead more focused on the technical aspects of blockchain networks.
If validators and miners were treated as financial institutions, they would face significant costs to comply with regulations, which would cause many companies in the digital asset industry to leave the United States for more favourable conditions elsewhere.
The bill also includes provisions for crypto-mixers and privacy coins and protocols like Monero and Dash, indicating that the Secretary of the Treasury will have an eighteen month time window to produce regulations for financial institutions to establish controls to avoid using these for money laundering purposes. It also establishes regulations and registration for cryptocurrency kiosks.
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Different countries are taking steps to counter crypto money laundering
Different countries are taking steps to regulate the use of cryptocurrencies to prevent money laundering.
The Government of Canada closed its public consultation in search of ways to improve Canada’s anti-money laundering and anti-terrorist financing regime on August 1, and there have been suggestions of a new law giving the government powers to seize cryptocurrency used in the commission of a crime.
These measures are part of a suite of Budget 2023 proposals the Liberal government is putting forth to address money laundering, terrorist financing and other financial crimes.
Japan introduced rules against money laundering in cryptocurrency transactions earlier this year. While South Korea implemented the anti-money laundering watchdog’s, Financial Action Task Force’s (FATF), travel rule last year.
These guidelines make it necessary for companies dealing with digital assets to gather and share information about the sender and receiver of funds, especially if the amount crosses a particular financial limit.
South Korea has gone a step ahead by turning these FATF guidelines into law. Starting from March 25 of the previous year, all transactions over a million Korean won (roughly $1,100 at current exchange rates) are now legally required to follow these guidelines. Companies were granted a grace period of one year to adjust and adhere to this new law.
In March, India expanded its Prevention of Money Laundering Act to cover digital assets.
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