Treasury Seeks More Money for Illicit-Finance Oversight, Including Crypto and Cybercrime – The Wall Street Journal

The Biden administration’s financial intelligence and sanctions units need significantly more funding and staff to combat national-security threats, including ones arising from ransomware and cryptocurrency markets, the Treasury Department’s second in command told lawmakers Tuesday.

The department needs additional funding to oversee expansive sanction programs, implement major new anti-money-laundering laws and protect the U.S. from terrorists, international criminal groups, state actors and other foes that have become increasingly adept at using an evolving global financial system for their activities, said Deputy Treasury Secretary Wally Adeyemo.

Mr. Adeyemo’s call for more funding at a Senate banking committee hearing follows publication Monday of the administration’s new U.S. sanctions policy review. The publication is the result of a nine-month Treasury-led audit of sanctions, the first comprehensive review of how the U.S. uses its tools of financial warfare and economic diplomacy since the terrorist attacks of Sept. 11, 2001, Mr. Adeyemo said.

Sanctions will remain a critical policy tool, Treasury officials said, but need to be better calibrated. The Biden administration plans to refocus the vetting process for sanctions to more heavily weigh the potential for unintended harm to vulnerable groups, resistance from allies and other economic and geopolitical fallout, the officials said Monday.

Technological changes—like the growth of digital currencies—are one of the four primary challenges identified in the review that could undermine the power of U.S. sanctions and national security by helping hide illicit activity, including sanctions evasion, Mr. Adeyemo said.

He also said Treasury needs to modernize its operational capabilities, including by hiring people who specialize in blockchain markets and by investing in the technology needed to track money involved in ransomware and other cybercrime.

Newsletter Sign-up

Risk and Compliance Journal

Our Morning Risk Report features insights and news on governance, risk and compliance.

Since Congress holds the administration’s purse strings, the Treasury needs the backing of lawmakers.

“One of the most important areas for us, frankly, is ensuring that we have a workforce that understands these issues going forward,” Mr. Adeyemo told lawmakers.

The Biden administration has asked for more funding and staff for the three Treasury offices that investigate financial crimes. The Financial Crimes Enforcement Network, an anti-money-laundering unit, is seeking a 50% increase for its budget to $190.5 million next year and wants to expand its staff by 25%. The Office of Terrorism and Financial Intelligence wants to increase its budget and workforce by 5%. The Internal Revenue Service, whose agents are key to busting international criminal networks using cryptocurrencies, is asking for $41 million to expand its oversight of cybercrimes.

Former Treasury officials from Democratic and Republican administrations say the department, because of its critical and central national-security role, requires more resources after a two-decade expansion in the use of sanctions as a key foreign-policy tool and because criminals and markets have become more financially sophisticated.

Staffing shortfalls are most acute right now as a few senators block political appointments to head the offices responsible for sanctions oversight.

The Biden administration has described ransomware as a national-security threat and has made combating ransomware attacks a priority. The Treasury said Friday that the volume of suspected ransomware payments flagged by U.S. banks has surged this year and is on pace to nearly double last year’s level. The Treasury on the same day released new guidance urging companies to guard against attacks and avoid paying ransoms.

The Biden administration in September for the first time ever blacklisted a cryptocurrency exchange, a Russian-owned platform accused of helping launder ransomware payments.

Mr. Adeyemo said the Treasury is committed to using sanctions to go after those that use crypto payments to violate U.S. laws by committing ransomware attacks and that the administration sees international coordination as key to that effort. “Many of these crypto exchanges and cybercriminals that facilitate ransomware exist outside of the United States and have an impact here,” he said.

Treasury intends to make sure U.S. allies and partners also take actions to adopt anti-money-laundering rules for crypto exchanges and to extend existing protections within their traditional financial sectors to cryptocurrencies and other financial technologies started in their jurisdictions, Mr. Adeyemo said.

Write to Mengqi Sun at and Ian Talley at

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8