Cybersecurity Digital Policy Economy & Business Financial Regulation
Fintech Frontlines May 14, 2024

What to do about ransomware payments

By Carole House

Ransomware is a destabilizing form of cybercrime with over a million attacks targeting businesses and critical infrastructure every day.  Its status as a national security threat, even above that of other pervasive cybercrime, is driven by a variety of factors like its scale, disruptive nature, and potential destabilizing impact on critical infrastructure and services—as well as the sophistication and innovation in ransomware ecosystems and cybercriminals, who are often Russian actors or proxies.   

The ransomware problem is multi-dimensional. Ransomware is both a cyber and a financial crime, exploiting vulnerabilities not only in the security of digital infrastructure but also in the financial system that have enabled the rise of sophisticated Ransomware-as-a-Service (RaaS) economies.  It is also inherently international, involving transnational crime groups operating in highly distributed networks that are targeting victims, leveraging infrastructure, and laundering proceeds without regard for borders.  As with other asymmetric threats, non-state actors can achieve state-level consequences in disruption of critical infrastructure.

With at least $1 billion reported in ransomware payments in 2021 and with incidents targeting critical infrastructure like hospitals, it is not surprising that the debate on ransomware payments is rising again. Ransomware payments themselves are problematic—they are the primary motive for these criminal acts, serving to fuel and incentivize this ecosystem.  Many are also inherently already banned in that payments to sanctioned actors are prohibited. However, taking a hardline position on ransomware payments is also challenging because of its potential impact on victims, visibility and cooperation, and limited resources.

Cryptocurrency’s role in enabling ransomware’s rise

While ransomware has existed in some form since 1989, the emergence of cryptocurrencies as an easy means for nearly-instantaneous, peer-to-peer, cross-border value transfer contributed to the rise of sophisticated RaaS economies. Cryptocurrencies use largely public, traceable ledgers which can certainly benefit investigations and disruption efforts. However, in practice those disruption efforts are hindered by weaknesses in cryptocurrency ecosystems like lagging international and industry compliance with anti-money laundering and countering financing of terrorism (AML/CFT) standards; growth of increasingly sophisticated methods of obfuscation leveraging mixers, anonymity-enhanced cryptocurrencies, chain-hopping, and intermixing with off-chain and traditional finance methods; and insufficient steps taken to enable real-time, scaled detection and timely interdictionof illicit cryptocurrency proceeds.

Despite remarks by some industry and policymaker advocates, RaaS economies would not work at the same level of scale and success without cryptocurrency, at least in its current state of compliance and exploitable features. Massively scaled ransomware campaigns targeting thousands of devices could not work by asking victims to pay using wire transfers and gift cards pointing to common accounts at regulated banks or widely publishing a physical address. Reliance on traditional finance methods would require major, and likely significantly less profitable, evolution in ransomware models.

The attraction of banning ransomware payments

Any strategy to deal with ransomware needs to have multiple elements, and one key aspect is the approach to ransomware payments. The Biden Administration’s multi-pronged counter-ransomware efforts have driven unprecedented coordination of actions combating ransomware, seen in actions like disrupting the ransomware variant infrastructure and actors, OFAC and FinCEN designations of actors and financial institutions facilitating ransomware, pre-ransomware notifications to affected companies by CISA, and a fifty-member International Counter-Ransomware Initiative.

However, ransomware remains a significant threat and is still affecting critical infrastructure. As policymakers in the administration and in Congress consider every tool available, they will have to consider the effectiveness of the existing policy approach to ransomware payments. Some view payment bans as a necessary action to address the risks ransomware presents to Americans and to critical infrastructure. Set against the backdrop of the moral, national security, and economic imperatives to end this destabilizing activity, bans could be the quickest way to diminish incentives for targeting Americans and the significant amounts of money making it into the hands of criminals.

Additionally, banning ransomware payments promotes other Administration policy objectives like driving a greater focus on cybersecurity and resilience. Poor cyber hygiene, and especially often poor identity and access management, are frequently exploited in ransomware. Removing payments as a potential “escape hatch” is seen by some as a way to leverage market forces to incentivize better cyber hygiene, especially in a space where the government has limited and fragmented regulatory authority.

Those who promote bans typically do not come to that position lightly but instead see them as a last resort to try to deter ransomware.  The reality is that we have not yet been able to sufficiently scale disruption to the extent needed to diminish this threat below a national security concern—driven by insufficient resourcing, limits on information sharing and collaboration, timeliness issues for use of certain authorities, and insufficient international capacity and coordination on combating cyber and crypto crime. When policymakers are in search of high-impact initiatives to reduce the high-impact threat of ransomware, many understandably view bans as attractive.

Challenges with banning ransomware payments

However, taking a hardline position on ransomware payments can also present practical and political challenges:

  • Messaging and optics of punishing victims:A ban inherently places the focus of the policy burden and messaging on the victims, potentially not stopping them from using this tool but instead raising the costs for them to do so. Blaming victims that decide to pay in order to keep their company intact presents moral and political challenges.
  • Limited resources that need to be prioritized against the Bad Guys:  For a ban to be meaningful, it would have to be enforced. Spending enforcement resources against victims to enforce a ban—resources which could have been spent on scaling disruption of the actual perpetrators—could divert critically limited resources from efforts against the ransomware actors.
  • Likelihood that payments will still happen as companies weigh the costs against the benefits:  Many feel that companies, if faced between certain demise and the costs of likely discovery and legal or regulatory action by the government, will still end up making ransomware payments.
  • Disincentivizing reporting and visibility:  A ban would also make companies less likely to report that they have been hit with ransomware, as they will aim to keep all options open as they decide how to proceed. This disincentivizes transparency and cooperation from companies needed to drive effective implementation of the cyber incident and ransomware payment reporting requirements under the Cybersecurity Incident Reporting for Critical Infrastructure Act (CIRCIA) regulations to the Cybersecurity and Infrastructure Security Agency (CISA). Diminished cooperation and transparency could have a devastating effect on investigations and disruption efforts that rely on timely visibility.
  • Asking for permission means the government deciding which companies survive:  Some advocates for bans propose exceptions, such as supplementing a presumptive ban with a licensing or waiver authority, where the government is the arbiter of deciding which companies get to pay or not.  This could enable certain entities like hospitals to use the payment “escape hatch.” However, placing the government in a position to decide which companies live and die is extremely complicated and presents uncomfortable questions.  It is unclear what government body could be capable, or should be endowed with the authority of making that call at all, especially in as timely a fashion as would be required.  Granting approval could also place the government in the uncomfortable position of essentially approving payments to criminals.

Additional policy options that can strike a balance for practical implementation

In light of the large-scale, disruptive threat to critical infrastructure from ransomware, policymakers will have to consider other initiatives along with its ransomware payment approach to strike a balance on enhancing disruption and incentivizing security measures:

  • Resource agencies and prioritize counter-ransomware efforts: Government leadership must properly resource through appropriations and prioritize disruption efforts domestically and internationally as part of a sustained pressure campaign against prioritized ransomware networks.
  • International cyber and cryptocurrency capacity building and pressure campaign: Agencies should prioritize targeted international engagement, such as capacity building where capability lags and diplomatic pressure where political will lags, toward defined priority jurisdictions.  Capacity building and pressure should drive both cybersecurity and cryptocurrency capacity, such as critical infrastructure controls, regulatory, and law enforcement capabilities. Jurisdictional prioritization could account for elements like top nations where RaaS actors and infrastructure operate and where funds are primarily laundered and cashed out.
  • Enhance targeting authorities for use against ransomware actors: Congress should address limitations in existing authorities to enable greater disruptive action against the cyber and financial elements of ransomware networks. For example, Congress could consider fixes to AML/CFT authorities (e.g., 311 and 9714 Bank Secrecy Act designations) for better use against ransomware financial enablers, as well as potential fixes that the defense, national security, and law enforcement communities may need.
  • Ensure government and industry visibility for timely interdiction and disruption of ransomware flows: Congressional, law enforcement, and regulatory agencies should work with industry to ensure critical visibility across key ecosystem participants to enable disruption efforts, such as through: Enforcing reporting requirements of ransomware payments under CIRCIA and US Treasury suspicious activity reporting (SAR) requirements; Mandating through law that entities (such as digital forensic and incident response [DFIR] firms) that negotiate or make payments to ransomware criminals on behalf of victims, including in providing decryption services for victims, must be regulated as financial institutions with SAR reporting requirements; Driving the evolution of standards, like those for cyber indicators, to enable real-time information sharing and ingestion of cryptocurrency illicit finance indicators for responsible ecosystem participants to disrupt illicit finance flows.
  • Prioritize and scale outcome-driven public-private partnerships (PPPs): Policymakers should prioritize, fund, and scale timely efforts for PPPs across key infrastructure and threat analysis actors (e.g., internet service providers [ISPs], managed service providers [MSPs], cyber threat firms, digital forensic and incident response [DFIR] and negotiation firms, cryptocurrency threat firms, cryptocurrency exchanges, and major crypto administrators and network-layer players [e.g., mining pools and validators]) focused on disruption of key ransomware activities and networks.
  • Incentivize and promote better security while making it less attractive to pay ransoms: Policymakers could leverage market and regulatory incentives to drive better security measures adoption to deter ransomware and make it less attractive to pay.  For example, legislation could prohibit cyber insurance reimbursement of ransomware payments. Regulatory action and legislative authority expansion could also drive implementation of high-impact defensive measures against ransomware across critical infrastructure and coordination of international standards on cyber defense.

While attractive for many reasons, banning ransomware payments presents challenges for limiting attacks that demand a broader strategy to address. Only this kind of multi-pronged, whole-of-nation approach will be sufficient to reduce the systemic threats presented by disruptive cybercrime that often targets our most vulnerable.


Carole House is a nonresident senior fellow at the Atlantic Council GeoEconomics Center and the Executive in Residence at Terranet Ventures, Inc. She formerly served as the director for cybersecurity and secure digital innovation for the White House National Security Council.

Further reading

Image: Futuristic Digital Technology Vector Background. Cyber Attack, Ransomware, Malware, Scareware Concept