Banking and Finance Law Daily Wrap Up, OVERSIGHT AND INVESTIGATION—Senators seek info on DEA, ONDCP efforts against crypto use in illegal drug trade, (May 31, 2024)

By Jeff Williams

A letter from Sens. Warren and Cassidy highlights the difficulties the use of cryptocurrency presents for law enforcement agencies trying to stop illegal drug traffic.

Pointing to data showing increases in overdose deaths in recent years, particularly because of increased fentanyl use, Sens. Elizabeth Warren (D-Mass.) and Bill Cassidy (R-La.) have sent a letter to the heads of the White House Office of National Drug Control Policy (ONDCP) and the Drug Enforcement Administration (DEA) seeking information on what steps the Biden administration is taking to “disrupt” drug traffickers’ use of cryptocurrency to build their businesses and launder their “ill-gotten” gains. “Cryptocurrency has played an increasingly prominent role in the global fentanyl trade over the past decade, both in terms of facilitating the manufacturing and trafficking of fentanyl and in laundering drug cartels’ criminal proceeds, and has been recognized as a threat by administrations of both parties,” the senators said in the letter to ONDCP Director Rahul Gupta and DEA Administrator Anne Melissa Milgram.

The letter cited data showing overdose deaths from opioids has “dramatically increased” in recent years and noted that increase has been “attributed to the rapid proliferation of illicitly produced fentanyl.” The senators also detailed the “global network” that contributes to the production of the drug, including the role of companies and financial firms in China and drug cartels in Mexico. The letter also outlined efforts during both the Trump and Biden administrations to assess and address the use of cryptocurrency in drug trafficking and the difficulty law enforcement has detecting crypto transactions.

“In response to the growing use of crypto in the illicit drug trade, the DEA, the Department of the Treasury, the Department of Justice (DOJ), and other federal agencies have implemented initiatives to combat the use of crypto in drug trafficking,” Warren and Cassidy said. “These actions have had an immediate impact.”

While they said those developments are “welcome,” the senators asked Gupta and Milgram to answer several questions by June 14 about “steps your offices are taking to disrupt illicit drug actors’ use of crypto.” The letter requested the offices to provide their “current assessments of the role that cryptocurrency plays with regard to illegal drug trafficking in general, and opioids in particular” and to outline “specific actions” Biden administration has taken regarding the role of cryptocurrency in fentanyl trafficking since President Biden issued Executive Order 14059 in December 2021. That executive order declared international trafficking of illegal drugs a national emergency and, among its provisions, authorized the Treasury Department to impose various financial sanctions on foreign actors involved in the drug trade.

The senators also asked for information about what new initiatives the DEA and ONDCP plan to implement in the next year regarding the use of cryptocurrency in drug trafficking, as well as about what metrics they are using to “measure success in fighting illicit use of cryptocurrency in fentanyl trafficking." The letter further requested Gupta and Milgram to describe the “challenges” their office face in their efforts to prevent the use of cryptocurrency in illegal drug transactions and to discuss what statutory limits they face and any specific recommendations they have for Congress to address the issue.

LegislativeActivity: CrimesOffenses FinTech OversightInvestigations