The Financial Crimes Enforcement Network (FinCEN), a unit of the U.S. Treasury Department, has proposed a new rule aimed at increasing transparency around cryptocurrency “mixers,” calling them a “national security risk.” This move is part of an effort to combat their use by groups such as Hamas.
As reported by Reuters, if the rule is finalized, financial firms will be required to report information about transactions that they suspect involve crypto mixers which are software tools that enable users to hide the source or owner of digital assets.
The proposal by FinCEN highlights the growing concerns among U.S. officials about the use of crypto for financing groups deemed as “terrorist groups” by the U.S. government. This issue has been in the limelight following a deadly attack in Israel by Hamas this month.
A section of the official press release read, “The lack of transparency surrounding international CVC mixing activity is an acute money laundering and national security risk, and increasing transparency in connection with this activity is a key component to denying illicit actors access to the U.S. and global financial systems.”
According to the report, Hamas uses a global financing network, including cryptocurrencies, to funnel support from charities and nations friendly to their cause. This was brought to light in a Reuters report earlier this week.
On Wednesday, the Biden administration issued sanctions to disrupt Hamas’ funding, which included a Gaza-based crypto exchange. U.S lawmakers have urged the White House to act swiftly in cracking down on the use of cryptocurrencies to evade sanctions and fund operations of groups like Hamas and Hezbollah.
Last year, the U.S. imposed sanctions on crypto mixers Tornado Cash and Blender.
“Today's action underscores Treasury's commitment to combating the exploitation of Convertible Virtual Currency mixing by a broad range of illicit actors, including state-affiliated cyber actors, cybercriminals, and terrorist groups," stated Deputy Treasury Secretary Wally Adeyemo.
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