Date: August 22, 2025
Manhattan, NYC— The Federal Money Services Business Association (FedMSB) has formally submitted its comment to the U.S. Department of the Treasury in response to the Request for Comment under Section 9(a) of the GENIUS Act, focused on “Innovative Methods to Detect Illicit Activity Involving Digital Assets” (Docket No. TREAS-DO-2025-0070).
As the national trade association representing regulated money services businesses (MSBs), FedMSB supports Treasury’s efforts to explore the use of application programming interfaces (APIs), artificial intelligence (AI), digital identity verification, and blockchain monitoring as tools to better detect and mitigate illicit finance risks, including money laundering, fraud, and sanctions evasion.
Three Key Recommendations
In its filing, FedMSB urged Treasury to take the following priority actions:
- Standardize evidence exchange — Establish a Treasury-referenced RegTech Evidence API to enable secure, low-cost sharing of risk signals and audit data.
- Create an AI good-faith safe harbor — Recognize the use of AI governance practices aligned with the NIST AI Risk Management Framework (RMF)—including model transparency, bias/drift monitoring, and human-in-the-loop review—as a basis for safe harbor in good-faith AI use.
- Promote privacy-preserving collaboration — Support pilots using privacy-enhancing technologies, such as private set intersection (PSI) and cross-chain monitoring, to improve collaboration while safeguarding sensitive data.
Emerging Risks Identified
FedMSB highlighted several pressing risks in the digital asset ecosystem:
- Cross-chain bridge laundering that exploits rapid transfers and wrapped assets.
- Mixers and peel chains that fragment and obscure transaction provenance.
- On/off-ramp mule networks and scams including romance fraud and account takeovers.
- Sanctions evasion and ransomware financing particularly involving DPRK-linked actors.
Partnership Between Industry and Government
FedMSB emphasized that combating illicit finance requires close collaboration between industry and government. The association called on Treasury to:
- Clarify that Section 314(b) safe harbor extends to risk labels and typology matches.
- Publish open reference schemas and shared utilities.
- Provide phased compliance support and funding assistance for smaller entities.
Statement from FedMSB
Peter Tang, Director of FedMSB, said:
“Digital assets bring innovation to the financial system, but also new vulnerabilities that criminals exploit. We urge Treasury to provide clear policy signals and technical support so that the industry can effectively combat illicit finance while protecting privacy and keeping compliance costs proportionate.”
FedMSB reaffirmed its readiness to provide supporting data, participate in pilots, and contribute to Treasury’s upcoming report to Congress.
For the full comment information, please read: