A bipartisan group of four senators today (Wednesday) introduced the Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Bill to the United States Senate. In a statement, they explained that the goal of the bill is to
subject decentralized finance (DeFi) services to the same anti-money laundering (AML)
and economic sanctions compliance obligations imposed on banks, securities
brokerages and even centralized crypto exchanges such as
Binance and Coinbase.
Specifically, the bill was sponsored by Democratic Senator Jack Reed, with support from fellow Democrat, Mark Warner and Republican lawmakers Mike Rounds
and Mitt Romney. In addition to DeFi, the new bill is seeking to
empower public authorities under the US Treasury Department to fight money
laundering threats as these agencies are currently
limited to transactions conducted under the traditional banking system.
Furthermore,
the new bill proposes that crypto ‘kiosks’ or Automated
Teller Machine operators must verify the identities of parties that engage in crypto exchange activities
on their platform in order to ‘improve traceability of funds’.
DeFi
platforms are blockchain-based applications such as decentralized exchanges
that enable users to engage in peer-to-peer financial transactions. However,
the legislators stated that criminal actors are deploying the anonymity
provided by DeFi platforms and gaps in United States’ AML regulatory framework
to launder criminal proceeds and fund more crime.
“These
requirements will close an attractive avenue for money laundering that has been
routinely exploited over the past several months by the North Korean
government, Chinese chemicals manufacturers, Mexican drug cartels,
cybercriminals, ransomware attackers, scammers, and a host of other bad
actors,” the legislator explained.
With the
CANSEE bill, the lawmakers want to end ‘special treatment for DeFi’. The
proposed legislation includes provisions that will require DeFi platforms to
“meet basic obligations, most notably to maintain AML programs, conduct due
diligence on their customers, and report suspicious transactions to FinCEN,” they noted.
“The
legislation also makes clear that if a sanctioned person, like a Russian
oligarch, uses a DeFi service to evade U.S. sanctions, then anyone who…
