The U.S. Department of Treasury is intensifying its efforts to curb the potential for money laundering and criminal financing through cryptocurrencies.

Improving “anti-money laundering/combating the financing of terrorism (AML/CFT)” rules is a part of regulating the “evolving threat” of cryptocurrencies, said Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker.

Mandelker recently testified before the Senate Banking, Housing and Urban Affairs Committee.

Financial institutions must implement updated regulations to guarantee they are in line with new rules, which would include a new “due diligence” rule that takes effect in May 2018, Mandelker said.

Cryptocurrency exchanges would be under this umbrella, Mandelker said, saying how the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) would collaborate with exchanges to ensure criminal parties were not using cryptocurrencies to transfer funds.

She said:

“To ensure that virtual currency providers and exchangers know the rules and follow them, FinCEN has prioritized engagement with – and examination of – these entities, focusing both on the approximately 100 that have registered with FinCEN as money transmitters as required, as well as those that have not.”

The agency has collaborated with the Internal Revenue Service to propose specific actions some of these exchanges can do to better conform to existing regulations, she said.

Mandelker also took note that the U.S. is working together with other nations to regulate cryptocurrencies in general.

The European Union is at the moment, in the process of developing more rigorous regulations for financial institutions to guard against terrorist financing as well, Mandelker said.

FinCEN has already started taking enforcement movements as well, she said, claiming the U.S.’s shutdown and fine on the former BTC-e exchange, as well as the fine on its alleged operator Alexander Vinnik.