Law enforcement associations, anti-corruption advocates and a major banking group are warning that a new bill aimed at regulating the United States’ cryptocurrency industry could leave big gaps in safeguards against dirty money in digital currencies that have already become a financial vehicle for organized crime.

Known as the Clarity Act, the bill seeks to bring cryptocurrency under a single legal framework on the national level, ending years of the industry operating in gray areas. Crypto companies and President Donald Trump have heavily championed the bill. Defenders of the bill say that it fills a crucial regulatory vacuum and provides law enforcement with new tools to address crime. But critics argue it contains dangerous loopholes and prioritizes studies and pilot programs instead of holding all crypto services to stringent anti-money laundering standards.

This is largely window-dressing type regulation.

— Gary Kalman, executive director of Transparency International U.S.

In recent months, law enforcement groups including the National Sheriffs’ Association and the National Association of Assistant U.S. Attorneys have sent letters to lawmakers voicing a common concern: They argue that the bill could create regulatory exemptions for certain decentralized and automated cryptocurrency services that criminals often rely on to obfuscate their fund flows.

Yesterday, four law enforcement groups representing police chiefs, sheriffs and prosecutors told the acting U.S. Attorney General that, despite discussions with senior officials across the Trump administration, their concern that the bill’s “broad exemptions could create gaps in oversight and accountability that sophisticated criminal actors may exploit” remains unresolved. The letter said its signatories represent more than 70,000 law enforcement professionals across the U.S.

“Criminal organizations increasingly utilize digital assets to facilitate and conceal unlawful activity, including narcotics trafficking, fraud, child exploitation, ransomware attacks, sanctions evasion, terrorism financing, organized retail crime, and other forms of transnational criminal activity,” the letter states, pointing to exemptions for some decentralized businesses. “Regulatory certainty should not come at the expense of accountability, transparency, victim protection, or public safety.”

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Key industry players disagree with these groups’ criticisms of the bill. The bill’s alleged loophole for decentralized services “does not exist,” Robin Cook, the director of U.S. Policy at the crypto giant Coinbase, told ICIJ in an interview. Cook points to a section 301 of the bill that he says will in fact bring most automated trading protocols under traditional anti-money laundering requirements.

“It is bringing new regulation at the federal level where there isn’t any today,” Cook told ICIJ. “That is not a deregulatory bill. The idea that somehow this is deregulatory is demonstrably false.”

The Coin Laundry, an investigation by the International Consortium of Investigative Journalists and 37 partner publications, found that criminals and other suspect actors commonly relied on decentralized trading protocols that can help make financial trails harder for law enforcement to trace.

https://www.icij.org/investigations/coin-laundry/trump-administration-curbs-state-oversight-of-crypto-industry/

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Cyprus’ anti-corruption authority has found “potential acts of corruption” and “abuse of power” by former President Nicos Anastasiades during his 10 years in office, referring possible criminal charges to prosecutors for further scrutiny.

The country’s Independent Anti-Corruption Authority alleges Anastasiades may have improperly tried to influence investigations into suspected payments to political parties and politicians, intervened in a Russian oligarch’s citizenship application, and may have used his office to stymie an anti-money laundering probe involving his former law firm.

Last week, the authority announced the criminal referrals to the attorney general in a sprawling 16,000-word statement summarizing its investigation into allegations made in “Kratos Mafia,” or “Mafia State,” a 2022 book by Makarios Drousiotis, a former Anastasiades aide turned investigative journalist.

The announcement includes a chapter-by-chapter breakdown of Drousiotis’ book, following the watchdog’s two-year investigation into those allegations that fell under its purview. The authority said it issued summons and interviewed key witnesses, including Drousiotis and Anastasiades himself, who “testified for many hours, spanning more than one day.”

The referrals to the attorney general were made as part of a confidential “final report” comprising more than 3,000 pages, along with other supporting documents. The authority cautioned that every person mentioned in the report carried a presumption of innocence and that “only a court of law is competent to determine a person’s guilt.” Anastasiades has repeatedly denied wrongdoing.

The Independent Anti-Corruption Authority was created in 2022 under pressure from the European Union and the U.S. to address longstanding concerns about public corruption in Cyprus and its rise to become a crucial financial hub for Vladimir Putin’s regime in Russia.

https://www.icij.org/investigations/cyprus-confidential/cyprus-model-politics-tax-haven-russian-wealth/

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