[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2669 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 2669
To require the Financial Crimes Enforcement Network to issue guidance
on digital assets, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 27, 2023
Ms. Warren (for herself, Mr. Marshall, Mr. Manchin, and Mr. Graham)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To require the Financial Crimes Enforcement Network to issue guidance
on digital assets, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Digital Asset Anti-Money Laundering
Act of 2023''.
SEC. 2. DEFINITIONS.
(1) Anonymity enhanced cryptocurrency.--The term
``anonymity enhanced cryptocurrency'' means a digital asset
containing any feature that--
(A) prevents tracing through distributed ledgers;
or
(B) conceals or obfuscates the origin, destination,
and counterparties of digital asset transactions.
(2) Digital assets.--The term ``digital asset'' means an
asset that is issued or transferred using a cryptographically
secured distributed ledger, blockchain technology, or any other
similar technology.
(3) Digital assets kiosk.--The term ``digital assets
kiosk'' means a digital assets automated teller machine that
facilitates the buying, selling, and exchange of digital
assets.
(4) Digital assets mixer.--The term ``digital assets
mixer'' means a website, software, or other service with
features that conceal or obfuscate the origin, destination, or
counterparties of digital asset transactions.
(5) Financial institution.--The term ``financial
institution'' has the meaning given the term in section 5312(a)
of title 31, United States Code.
(6) Money services business.--The term ``money services
business'' has the meaning given the term in section 1010.100
of title 31, Code of Federal Regulations.
(7) Unhosted wallet.--The term ``unhosted wallet'' means
software or hardware that facilitates the storage of public and
private keys used to digitally sign and securely transact
digital assets, such that the stored value is the property of
the wallet owner and the wallet owner has total independent
control over the value.
(8) Validator.--The term ``validator'' means a person or
entity that--
(A) processes and validates, approves, or verifies
transactions, or produces blocks of digital asset
transactions to be recorded on a cryptographically
secured distributed ledger or any similar technology,
as specified by the Secretary of the Treasury; and
(B) may perform other such services that may secure
a digital assets kiosk network.
SEC. 3. DIGITAL ASSET REQUIREMENTS.
(a) Digital Assets Participants Designation.--
(1) Definition of financial institution.--
(A) In general.--Section 5312(a)(2) of title 31,
United States Code, as amended by section 6110(a)(1) of
the Anti-Money Laundering Act of 2020 (division F of
Public Law 116-283), is amended--
(i) in subparagraph (Z), by striking ``or''
at the end;
(ii) by redesignating subparagraph (AA) as
subparagraph (BB); and
(iii) by inserting after subparagraph (Z)
the following:
``(AA) Unhosted wallet providers, digital asset
miners, validators, or other nodes that may act to
validate or secure third-party transactions,
independent network participants (including maximal
extractable value searchers), miner extractable value
searchers, other validators or network participants
with control over network protocols, or any other
person facilitating or providing services related to
the exchange, sale, custody, or lending of digital
assets that the Secretary shall prescribe by
regulation.''.
(B) Effective date.--The amendments made by
subparagraph (A) shall take effect on the day after the
effective date of the final rules issued by the
Secretary of the Treasury pursuant to section 6110(b)
of the Anti-Money Laundering Act of 2020 (division F of
Public Law 116-283).
(2) Regulations.--
(A) In general.--Not later than 180 days after the
date of enactment of this Act, the Secretary of the
Treasury, through the Director of the Financial Crimes
Enforcement Network, shall promulgate regulations
imposing requirements under subchapter II of chapter 53
of title 31, United States Code, on financial
institutions described in subparagraph (AA) of section
5312(a)(2) of title 31, United States Code, as added by
paragraph (1)(A) of this subsection.
(B) Exemption.--The Secretary of the Treasury,
through the Director of the Financial Crimes
Enforcement Network, should consider for exemption from
the regulations issued under subparagraph (A) assets--
(i) issued or transferred using a
cryptographically secured distributed ledger,
blockchain technology, or any other similar
technology used solely for internal business
applications;
(ii) not offered for sale, traded, or
otherwise converted to fiat currency or another
digital asset; or
(iii) otherwise deemed to pose little
illicit finance risk.
(C) Periodic reviews.--The Secretary of the
Treasury, through the Director of the Financial Crimes
Enforcement Network, shall periodic reviews of the
classifications under paragraph (2).
(b) Registration Rules.--The Financial Crimes Enforcement Network
has the authority to subject the entities described in subsection (a)
to the registration rules under section 5330 of title 31, United States
Code, and the foreign registration rules under section 1022.380(a)(2)
of title 31, Code of Federal Regulations.
(c) Implementation of Proposed Rule.--Not later than 1 year after
the date of enactment of this Act, the Financial Crimes Enforcement
Network shall finalize the proposed virtual currency rule (85 Fed. Reg.
83840; relating to requirements for certain transactions involving
convertible virtual currency or digital assets).
(d) Reporting Requirements.--Not later than 18 months after the
date of enactment of this Act, the Financial Crimes Enforcement Network
shall promulgate regulations that require United States persons with
greater than $10,000 in digital assets in 1 or more accounts outside of
the United States to file a report described in section 1010.350 of
title 31, Code of Federal Regulations, using the form described in that
section, in accordance with section 5314 of title 31, United States
Code.
(e) Treasury Regulations.--Not later than 18 months after the date
of enactment of this Act, the Secretary of the Treasury shall
promulgate regulations that require financial institutions to establish
controls to mitigate illicit finance risks associated with--
(1) handling, using, or transacting business with digital
asset mixers, anonymity enhanced cryptocurrency, and other
anonymity-enhancing technologies, as specified by the
Secretary; and
(2) handling, using, or transacting business with digital
assets that have been anonymized by the technologies described
in paragraph (1).
SEC. 4. EXAMINATION AND REVIEW PROCESS.
(a) Treasury.--Not later than 2 years after the date of enactment
of this Act, the Secretary of the Treasury, in consultation with the
Conference of State Bank Supervisors, shall establish a risk-focused
examination and review process for digital assets participants
designated as financial institutions and money services businesses to
assess--
(1) the adequacy of antimoney-laundering and countering-
the-financing-of-terrorism programs and reporting obligations
under subsections (g) and (h) of section 5318 of title 31,
United States Code; and
(2) compliance with antimoney laundering and countering-
the-financing-of-terrorism requirements under subchapter II of
chapter 53 of title 31, United States Code.
(b) SEC.--Not later than 2 years after the date of enactment of
this Act, the Securities and Exchange Commission, in consultation with
the Secretary of the Treasury, shall establish a dedicated risk-focused
examination and review process for entities regulated by the Commission
to assess--
(1) the adequacy of antimoney laundering and countering-
the-financing-of-terrorism programs and reporting obligations
under subsections (g) and (h) of section 5318 of title 31,
United States Code; and
(2) compliance with antimoney laundering and countering-
the-financing-of-terrorism requirements under subchapter II of
chapter 53 of title 31, United States Code.
(c) CFTC.--Not later than 2 years after the date of enactment of
this Act, the Commodity Futures Trading Commission, in consultation
with the Secretary of the Treasury, shall establish a dedicated risk-
focused examination and review process for entities regulated by the
Commission to assess--
(1) the adequacy of antimoney laundering and countering-
the-financing-of-terrorism programs and reporting obligations
under subsections (g) and (h) of section 5318 of title 31,
United States Code; and
(2) compliance with antimoney laundering and countering-
the-financing-of-terrorism requirements under subchapter II of
chapter 53 of title 31, United States Code.
SEC. 5. DIGITAL ASSETS KIOSKS.
(a) In General.--Not later than 18 months after the date of
enactment of this Act, the Financial Crimes Enforcement Network shall
require digital asset kiosks owners and administrators to submit and
update the physical addresses of the kiosks owned or operated by the
owner or administrator every 90 days, as applicable.
(b) Rulemaking.--Not later than 18 months after the date of
enactment of this Act, the Financial Crimes Enforcement Network shall
promulgate regulations requiring digital asset kiosk owners and
administrators to--
(1) verify the identity of each customer using a valid form
of government-issued identification or other documentary
method, as determined by the Secretary of the Treasury; and
(2) collect the name and physical address of each
counterparty to the transaction.
(c) Reports.--
(1) FinCEN.--Not later than 180 days after the date of
enactment of this Act, the Financial Crimes Enforcement Network
shall issue a report on digital assets kiosk networks operating
as money services businesses that have not registered with the
Financial Crimes Enforcement Network in violation of section
1022.380 of title 31, Code of Federal Regulations, that
includes--
(A) estimates of the number and locations of
suspected unlicensed operators, as applicable; and
(B) an assessment of any additional resources the
Financial Crimes Enforcement Network determines to be
necessary to investigate the unlicensed digital asset
kiosk networks.
(2) DEA.--Not later than 1 year after the date of enactment
of this Act, the Drug Enforcement Administration shall, in
consultation with other agencies as appropriate, issue a report
identifying recommendations to reduce drug trafficking and
money laundering associated with digital assets kiosks.
SEC. 6. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to the Secretary of the
Treasury such sums as are necessary to carry out this Act.
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