The Department of Justice (“DOJ”) has launched an ambitious realignment of its financial crime strategy, issuing two key policy pronouncements during spring 2025. Taken together, Deputy Attorney General Todd Blanche’s April 7 Memorandum, Ending Regulation by Prosecution, and Criminal Division Chief Matthew R. Galeotti’s May 12 remarks at Securities Industry and Financial Markets Association’s (“SIFMA”) Anti-Money Laundering and Financial Crimes Conference announce a coordinated, top-down course correction that will reverberate across the digital-asset ecosystem and the broader financial sector. The initiatives narrow the DOJ’s focus to the most pernicious threats—particularly investor fraud, terrorism, fentanyl and narcotics trafficking, organized crime, and sanctions evasion—while simultaneously dialing back “regulation by prosecution” of lawful market participants. At the same time, the DOJ continues to offer incentives for voluntary self-disclosure and cooperation, streamlining the use of corporate monitors, and reinforcing the centrality of robust compliance programs.
1. April 7 Memorandum: From “Regulation by Prosecution” to Targeted Digital-Asset Enforcement
The April 7 Memorandum signals a departure from the prior administration’s approach, which often sought to graft traditional securities or commodities frameworks onto novel blockchain technology through criminal indictments. Emphasizing that “the Justice Department is not a digital assets regulator,” Deputy Attorney General Blanche instructed prosecutors to discontinue cases whose “principal effect” is to impose licensing or registration regimes on technology providers. In practice, this means:
- Dropping charges premised on non-willful violations of money-transmission, Bank Secrecy Act (“BSA”), securities-registration, broker-dealer, or Commodity Exchange Act provisions.
- Avoiding litigation over whether a digital token is a “security” or “commodity” when classic Title 18 offenses—wire fraud, mail fraud, money laundering—will suffice.
- Shuttering the National Cryptocurrency Enforcement Team and reallocating those resources to United States Attorneys’ Offices pursuing higher-priority crimes.
What remains squarely in prosecutors’ crosshairs are cases in which individuals (i) steal or misappropriate customer assets, (ii) perpetrate investment frauds such as “rug pulls,” or (iii) deploy digital assets to facilitate other felonies. In line with clear priorities expressed by this administration, the policy expressly cites cartels, human smuggling networks, fentanyl suppliers, foreign terrorist organizations, and sanctions-evading regimes as prime targets.
2. May 12 Remarks: A Re-Imagined Anti-Money Laundering and Fraud Framework
Echoing the April 7 Memorandum’s investor-and-national-security focus, Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, unveiled a an updated Corporate Enforcement and Voluntary Self-Disclosure Policy devoted to “the most urgent threats to our country, our citizens, and our economy.” Key features include:
- Clarity and Carrots for Self-Disclosure. The Criminal Division’s revised Corporate Enforcement and Voluntary Self-Disclosure Policy now provides an automatic declination—rather than a mere presumption—for companies that (a) voluntarily self-report, (b) fully cooperate, (c) remediate promptly, and (d) have a case that lacks aggravating circumstances. Even when aggravating factors exist or the DOJ learns of misconduct first, a self-disclosing entity can still expect substantially reduced penalties, lighter terms, and no monitor.
- Right-Sizing Monitorships. A new monitor selection protocol imposes fee caps, budget approvals, and biannual tri-partite meetings to ensure that the “benefits of the monitor outweigh its costs.” DOJ is reviewing existing monitorships for narrowing or early termination.
- Enhanced Whistleblower Incentives. Qualifying whistleblowers whose information leads to forfeitures in priority areas—including sanctions evasion, cartel finance, and immigration-related fraud—may qualify for cash awards.
Collectively, these revisions aim to shorten investigative timelines, encourage early cooperation, and re-deploy prosecutorial bandwidth toward the highest-impact cases.
3. Compliance Expectations in the Digital Asset Arena
Although the DOJ’s rhetoric is conciliatory toward law-abiding innovators, the underlying statutory framework has not changed. Bank Secrecy Act (“BSA”)/anti-money laundering (“AML”) obligations, Office of Foreign Assets Control (“OFAC”) sanctions, and state consumer-protection statutes remain fully enforceable—and future administrations could revive aggressive federal prosecutions within the statutes of limitation. Consequently, digital asset exchanges, custodians, wallet providers, and related service firms should:
- Maintain rigorous Know-Your-Customer (“KYC”) onboarding, ongoing customer due diligence, and transaction monitoring.
- Implement blockchain-analytics solutions capable of tracing on-chain movements and generating actionable red-flag alerts.
- Document decision-making around token listings, protocol upgrades, and smart contract deployments to demonstrate the absence of scienter if a regulatory violation is alleged.
- Preserve detailed audit trails to facilitate rapid, credible cooperation should misconduct surface internally or via subpoena.
A strong compliance posture not only hedges against future prosecutorial pendulum swings but also positions a company to avail itself of the DOJ’s newly generous self-disclosure regime.
4. April 7 Memorandum: Digital Assets and Cartels
The April 7 Memorandum explicitly links digital-asset enforcement to the fight against cartels and transnational criminal organizations (“TCOs”). Executive Order 14157’s “total elimination” directive designates cartels as Foreign Terrorist Organizations and Specially Designated Global Terrorists, giving prosecutors expanded authorities to pursue their financial facilitators. The DOJ has identified several converging trends:
- Cartel Finance and Money Laundering. Mexican and Central American cartels increasingly accept bitcoin, stablecoins, and privacy-enhanced tokens as payment for narcotics shipments and precursor chemicals sourced from China. Mixing services and cross-chain bridges enable rapid layering, complicating asset tracing.
- Human Smuggling Networks. Digital wallets facilitate ransom payments and coordination along smuggling routes, often leaving only blockchain footprints instead of traditional bank wires.
- Fentanyl Supply Chains. Illicit marketplaces use cryptocurrency to settle transactions for fentanyl analogues, with darknet vendors rotating addresses to frustrate interdiction.
- Sanctions Evasion by State Proxies. Some TCOs act as intermediaries for sanctioned states, exchanging bulk cash for crypto, or vice versa, to skirt OFAC restrictions.
Under the April 7 Memorandum, prosecutors will prioritize seizing the wallets, tokens, and keys directly controlled by cartel members or their money-laundering nodes, while generally declining to pursue exchanges or custodians absent willful misconduct.
5. Practical Takeaways for Industry
- Self-Evaluate and Disclose. The DOJ has made clear the steps and substantial benefits for coming forward and reporting wrongdoing. A robust internal investigation, promptly followed by voluntary disclosure, may secure a declination even where wrongdoing occurred.
- Multi-Layered Enforcement. State regulators such as the New York Department of Financial Services may step into any perceived federal void. Parallel investigations by foreign authorities—especially under Europe’s MiCA regime—remain a possibility.
- Align Culture with Compliance. The DOJ’s message is unmistakable: companies that view compliance as a strategic asset, not a cost center, will fare far better than those that treat it as a check-the-box exercise.
Conclusion
The DOJ’s 2025 enforcement reset recalibrates prosecutorial resources toward the actors and conduct that have been identified by the current administration to inflict the greatest harm on investors, markets, and U.S. national security. Digital asset businesses, financial institutions, and multinational enterprises should seize this moment to reinforce compliance frameworks, upgrade investigative capabilities, and cultivate a culture that encourages prompt self-reporting to mitigate criminal exposure.