The US National Security Council’s Approach to Crypto and Sanctions
Speaking at the GDF Emergency Summit, Carole House, Director of Cybersecurity and Secure Digital Innovation at the US National Security Council, gave an overview of the US sanctions. Below are the key messages.
- The US imposed immediate sweeping financial sanctions and controls designed to inflic maximum pain on the Russian economy. Russia will end up further isolated from the global economic system. The action is not taken alone: international efforts have been central.
- It is worth noting that the scale that the Russian state would need to successfully circumvent all US and partners’ sanctions would render cryptocurrency as an ineffective tool. However, crypto can be exploited when proper controls are not in the system, and the US remains vigilant against this threat and the use of crypto as a means for evading sanctions.
- The US is committed to working with industry partners to curtail Russia’s ability to use cryptocurrency illicitly. Detecting and disrupting the misuse of cryptocurrency has been a priority for the US for some time, under the umbrella of US counter-ransomware strategy.
- The FATF’s focus on AML regulation is welcomed, along with the industry’s discussion about how we can drive the implementation of AML and CFT standards.
- Looking for guidance from the industry: crypto and financial institutions are on the frontlines of AML and sanctions frameworks, best-placed to see the illicit activity and prevent it. Virtual asset service providers should consider their AML and sanctions screening obligations to ensure that they are not misused to support the evasion of sanctions.
- The sanctions apply to all US persons, and not just financial institutions. This may include miners and validators, who should consider whether they have responsibilities regarding transactions.
- The FBI and the National Cyber Investigative Joint Task Force have launched the initial operational capability of the Illicit Virtual Asset Notification System Effort initiated under the US Counter Ransomware strategy.
- Through this and other private-public partnerships, the international community and US government will work collaboratively to disrupt illicit virtual asset activities.