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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2669 Introduced in Senate (IS)]

<DOC>

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.
                                 <all>
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