Treasury says it needs to modernize its economic sanctions

Business News

FILE – In this May 4, 2021, photo, the Treasury Building is viewed in Washington. The Treasury Department says that the economic and financial sanctions the United States has employed over the past two decades to battle global terrorism, nuclear proliferation, drug cartels and other threats need to adapt to a rapidly changing financial world. The department issued a report Monday, Oct. 18, 2021, that said it needs to modernize the technology it uses and upgrade its workforce to deal with new tools and techniques, such as digital currencies. (AP Photo/Patrick Semansky, file)

WASHINGTON (AP) — The Treasury Department says that the economic and financial sanctions the United States has employed over the past two decades to battle global terrorism, nuclear proliferation, drug cartels and other threats need to adapt to a rapidly changing financial world.

The department issued a report Monday that said it needs to modernize the technology it uses and upgrade its workforce to deal with new tools and techniques, such as digital currencies.

“Treasury’s sanctions review has shown that this powerful instrument continues to deliver results but also faces, new challenges,” Deputy Treasury Secretary Wally Adeyemo said in releasing the report.

The report found that since the Sept. 11, 2001, terrorist attacks, Treasury’s use of sanctions has increased by 933%, from 912 sanctions designations in 2001 to 9,421 this year.

The sanctions program is administered by Treasury in conjunction with recommendations from the White House and the State Department. The report said it was successful in preventing Iran from using the international financial system and commercial markets to generate revenue from oil sales to support its nuclear program, pushing the country to the negotiating table in 2015.

The report also said that the sanctions effort had frozen and seized billions of dollars in assets from front companies used by the Cali drug cartel, at one point the world’s largest drug trafficking organization. More than 1,600 terrorist entities and individuals have also been sanctioned since the 2001 terrorist attacks, according to the report.

But the review of Treasury’s sanction operations, which had been ordered by Treasury Secretary Janet Yellen, found that the effort needs to be updated.

The report said sanctions need to keep up with new and emerging techniques being employed by cybercriminals, and a changing financial system where such products as cryptocurrencies have already started to reduce the use of the U.S. dollar, long the world’s reserve currency.

“Technical innovations such as digital currencies, alternative payment platforms and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions,” the report said. “These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system.”

The report did not provide specifics of what Treasury was planning but last week, the United States joined with more than 30 countries in a commitment to coordinate actions against ransomware attacks through such moves as increasing data sharing among countries and tightening regulations on crypto markets.

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