Proposal aims to curb ‘CVC mixing’ money laundering by malicious actors – including Hamas, Islamic Jihad

International Convertible Virtual Currency Mixing (CVC mixing) is identified as a class of transactions of primary money laundering concern under a new rule proposed Thursday by Treasury’s financial crimes enforcement arm.

The Financial Crimes Enforcement Network (FinCEN) said its notice of proposed rulemaking (NPRM) highlights the risks posed by the extensive use of CVC mixing services by a variety of illicit actors throughout the world. The proposal, the agency indicated, will increase transparency around CVC mixing “to combat its use by malicious actors including Hamas, Palestinian Islamic Jihad, and the Democratic People’s Republic of Korea (DPRK).”

The proposal would require covered financial institutions to report information about a transaction when they know, suspect, or have reason to suspect it involves CVC mixing within or involving jurisdictions outside the United States, the agency said.

FinCEN, in a release, said lack of transparency surrounding international CVC mixing activity is an acute money laundering and national security risk, and increasing transparency in connection with this activity is a key component to denying illicit actors access to the U.S. and global financial systems.

“This increased transparency is also consistent with longstanding Treasury Department efforts to counter the efforts of terrorist groups, such as Hamas and Palestinian Islamic Jihad, that engage in violence against innocent civilians; the efforts of ransomware criminals targeting critical infrastructure; and the efforts by state actors and their supporters to evade U.S. and global sanctions,” the agency said.

FinCEN Proposes New Regulation to Enhance Transparency in Convertible Virtual Currency Mixing and Combat Terrorist Financing