US GAO Urges Virtual Currency Regulation to Counter Human Trafficking and Drug Cartels | Practical Law

US GAO Urges Virtual Currency Regulation to Counter Human Trafficking and Drug Cartels | Practical Law

The US Government Accountability Office (GAO) issued a report expressing concerns about the role that virtual currencies play in human and drug trafficking and urging regulation to combat such crimes.

US GAO Urges Virtual Currency Regulation to Counter Human Trafficking and Drug Cartels

by Practical Law Finance
Published on 20 Jan 2022 • USA (National/Federal)
The US Government Accountability Office (GAO) issued a report expressing concerns about the role that virtual currencies play in human and drug trafficking and urging regulation to combat such crimes.
On January 10, 2022, the US Government Accountability Office (GAO) issued a report identifying concerns regarding the role of virtual currencies (VC) in human and drug trafficking. According to GAO's review of agency documentation/data and interviews with officials, the number of suspicious activity reports filed with the Financial Crimes Enforcement Network (FinCEN) involving VC and drug trafficking increased from 252 to 1,432 between 2017 and 2020. GAO also found gaps in VC kiosk registration requirements that have the ability to impede law enforcements efforts in investigating money laundering, drug and human trafficking, and other crimes.
The report includes GAO's recommendations on how to regulate VC in an effort to counter human and drug trafficking efforts. The recommendations include:
  • The commissioner of the IRS should review the money services business (MSB) registration requirements for VC exchanges and administrators that operate VC kiosks and make recommendations to the director of FinCEN, such as requiring kiosk operators to submit the locations of kiosks they own or operate upon MSB registration.
  • The director of FinCEN and the commissioner of IRS should review MSB registration requirements for VC exchanges and administrators that operate VC kiosks and take appropriate actions.
The GAO report reflects the ongoing effort by US federal policymakers, regulators, and law enforcement to regulate VC in the interest of consumers and the public.