Yellen says Treasury Department could use more authority to address alleged use of crypto by terrorist groups

U.S. Treasury Secretary Janet Yellen told Sen. Sherrod Brown that the Treasury Department could use more authority to combat the alleged use of crypto by terrorist groups during a congressional hearing. 

The Ohio Democrat, who is viewed as holding the purse strings for any future crypto legislation, asked Yellen about what updates the Treasury needs to address the matter during Thursday's Senate Banking Committee hearing. Though most of the hearing centered around discussions of the economy as a whole, some Democrats asked Yellen about the use of crypto by bad actors. 

"We know that terrorist groups like Hamas, Al-Qaeda and Hezbollah have used digital assets to raise and transfer funds. We have important tools to counter illicit finance, but most of them date back to the post-9/11 era," Brown said." As terrorists continue to innovate, do we need to update our counter terrorism tools, Madam Secretary, to respond to the risks created by digital assets?"

Yellen said Treasury could use additional authority. 

"We do have many authorities that enable us to act, but we've identified a number of holes in our authorities and have composed a list of suggestions for ways in which Treasury's authorities could and should be strengthened," Yellen said.

Brown, who chairs the Senate Banking Committee, has called for a crackdown on the use of crypto to fund terrorism before and is in talks about a bill that would target the use of digital assets for money laundering, according to Politico. 

Push for a bill to prevent terrorism financing

Sen. Mark Warner, D-Va., asked Yellen during Thursday's hearing whether she thought his recent legislation, which would crack down on the ability of terrorist groups to use crypto, was needed. 

Sens. Warner, D-Va., Mike Rounds, R-S.D, Jack Reed, D-R.I, and Mitt Romney, R-Utah, introduced the Terrorism Financing Prevention Act in December which expands the Treasury Department's authority beyond a 2015 law that focused primarily on Hezbollah. 

The new bill would allow the agency to identify foreign financial institutions and foreign digital asset companies that knowingly facilitate transactions for Hamas and other groups, and then sanction them.

"I would agree that there are limitations that Treasury faces and we certainly support the aims of the bill," Yellen said. "It would help give us authorities that would enable us to better deal with a very significant threat." 

"I'm going to count that as an endorsement," Warner said in response.