US Treasury Launches AML and Stablecoin Oversight Consultation

The US Treasury has published a consultation about innovative methods that could be used to prevent AML failings and to detect illicit activity involving digital assets, as part of requirements set-out in the recently approved GENIUS Act.

The consultation is public and it’s open until October 17. The consultation comes after the GENIUS Act contains a directive for the Secretary of the Treasury to seek public comment to identify “innovative or novel methods, techniques, or strategies that regulated financial institutions use, or have the potential to use, to detect illicit activity, such as money laundering, involving digital assets.”

Once the consultation closes, the Treasury will research methods suggested by the public, summarize it in a report and submit it to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives, to allow them to develop new legislation and methods for detecting and preventing illicit activity.

There are four key comment areas: application program interfaces (APIs), artificial intelligence (AI), digital identity verification, and use of blockchain technology and monitoring. The Treasury will evaluate and consider whether the tools improve the ability of financial institutions to detect illicit activity involving digital assets, the costs involved and the amount and sensitivity of information that need to be collected for the activity.