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IRS Asks Lawmaker to Introduce Stronger KYC Rules on Crypto

Cybercrime prevention

IRS Asks Lawmaker to Introduce Stronger KYC Rules on Crypto

The Internal Revenue Service said it is recommending that lawmakers legislate stronger disclosure rules around the purchase and sale of cryptocurrencies to help prevent cyberattacks. The move came as a response to Sen. Maggie Hassan‘s concern over a cyberattack on the town of Peterborough in New Hampshire in August, which cost the community $2.3 million in taxpayer dollars, FedScoop reported Friday.

In a recent letter to Hassan, IRS Commissioner Charles Rettig said he recommended that money service businesses like cryptocurrency exchanges, kiosks and over-the-counter trading desks be required to collect detailed know-your-customer information to discourage anonymity. He explained to the New Hampshire senator that enhancing due diligence procedures on high-volume customers or implementing KYC requirements is likely to decrease the volume of suspicious transactions, strengthen the suspicious activity reports program, and help identify the purpose of transactions and the source of funds.

Rettig added that a stronger SAR program should enhance the recovery of stolen or embezzled funds or even prevent such crimes. While the IRS collects information on beneficial owners of entities holding accounts with U.S. brokers on some taxpayer forms, it is currently prohibited from sharing that information with the Financial Crimes Enforcement Network, the official lamented.

In his letter, Rettig further recommended enhancing civil and criminal penalties for extreme negligence or civil fraud cryptocurrency cases to promote voluntary reporting compliance. He also pointed out the need for increased funding for examiners and enforcement, which is included in the agency’s fiscal 2022 budget request.

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Category: Cybersecurity

Tags: Charles Rettig cryptocurrency cyberattacks cybersecurity FedScoop IRS Maggie Hassan Treasury Department