US Withdraws Two Crypto AML Provisions from National Defense Bill

The two provisions removed from the National Defense Authorization Act focused on AML cryptocurrency-related problems.

The US government has abolished two clauses from the National Defense Authorization Act (NDAA) that sought to solve anti-money laundering (AML) problems related to cryptocurrency.

Lawmakers Reconsider the Burdensome Reporting Requirements for Crypto Transactions

The NDAA is a law that sanctions how the nation’s defence department can utilize federal funding. Two of the removed provisions outlined a detailed assessment system and reporting of crypto tasks to avert illicit activities.

According to the first provision, the United States Secretary of the Treasury was required to work with the government and banking regulators to establish a risk-concentrated assessment and review system on crypto for financial entities.

Clause on Crypto Tumblers and Mixers Eliminated

The second clause addressed unidentified crypto asset transactions, especially those entailing crypto tumblers and mixers. This entailed generating a report indicating the crypto asset transaction volumes associated with sanctioned entities. Additionally, a report would explain the regulatory strategies that other jurisdictions embraced.

After that, the United States government would get direction concerning the execution of crypto guidelines: Suggestions for regulation or legislation associated with services and technologies described in paragraphs 1 and 3.

On July 28, it was reported that the US Senate ratified the National Defense Authorization Act worth $886B.

The crypto-associated amendments incorporated aspects of the Digital Asset Anti-Money Laundering Act. It also included elements of the Responsible Financial Innovations Act, which implements precautions to avert another situation similar to that of FTX. A group of senators, including Elizabeth Warren, Roger Marshall, Kirsten Gillibrand, and Cynthia Lummis, proposed the amendments.

Lawmakers Review DeFi and Crypto Exchange Role in Preventing Illicit Finance

Recently, the United States government has been discussing problems associated with terrorist financing and money laundering made possible using crypto.

A November 15 United States House of Representative Financial Services Committee meeting deliberated illicit activities in the crypto ecosystem. The meeting also involved an assessment of the state of proactive decentralized finance (DeFi) providers and crypto exchanges in averting terrorist funding and money laundering.