FinCEN Eyes Cryptocurrency Amid 1,500 Monthly Complaints

FSB Eyes Crypto Regulation

1,500 complaints about suspicious activity per month.

That’s the tally that FinCEN Director Kenneth A. Blanco told a conference last week that FinCEN, which operates as part of the Treasury Department, sees as cryptocurrency gains traction.

In remarks to the 2018 Chicago-Kent Block (Legal) Tech Conference, Blanco stated that “we now receive over 1,500 SARs per month describing suspicious activity involving virtual currency, with reports coming from both MSBs in the virtual currency industry itself and other financial institutions.”

As he told conference attendees, “we see the industry developing new techniques for identifying suspicious activity in virtual currency” so stakeholders can make efforts to eradicate what he said is the “negative perceptions of virtual currency as the coinage of the dark web and bad actors.”

The director noted that innovation in the space has its positives, boosting access to new services with greater speed than has been seen before.  But crime evolves right alongside the growth in those services, with opportunities expanding for terrorists and rogue states.

Virtual currency is an example of that dual-edged sword.  Blanco stated that “major money services businesses are looking at how to incorporate blockchain payments to expedite remittances to locations around the world.  But like any payment system or medium of exchange, virtual currency has the potential to be exploited for money laundering and other illicit finance.”

Over the past few years, he stated FinCEN has issued a number of rules that have helped clarify how firms should operate within cryptocurrency spheres.

Among those rulings, FinCEN has said that such rulings include crypto mining and trading platforms and issuance of ownership certificates.

“FinCEN’s rules apply to all transactions involving money transmission — including the acceptance and transmission of value that substitutes for currency, which includes virtual currency.  Thus, our regulations cover both transactions where the parties are exchanging fiat and convertible virtual currency, but also to transactions from one virtual currency to another virtual currency.

“Whether a business is operating as an individual peer-to-peer exchanger of one virtual currency, or a large, multi-national trading platform offering numerous virtual currencies, we expect you to comply with your AML/CFT regulatory obligations,” he stated.

All financial institutions should be implementing a strong AML program “long before they first receive notice that an examination is forthcoming.” Firms may become active in boosting compliance staff and meeting requirements after they receive notice, but as he said, “this does not constitute compliance.

“Compliance does not begin because you may get caught, or because you are about to be discovered.  That is not a culture that protects our national security, our country, and our families.  It is not a culture we will tolerate,” he stated.

States’ Rights?

Beyond cryptocurrencies, it was reported earlier this week that states may be at odds with the Trump White House amid differences on how FinTech should be regulated.  Some states want the federal government to step back a bit — even as the Treasury Department issued its report calling for more efforts to encourage FinTech development and the Office of the Comptroller of the Currency is accepting banking charter applications from those firms.


And in GDPR-related news, reports that more than one thousand U.S. news sites remain unavailable in Europe.  That comes roughly three months after the legislation took effect, where firms must disclose how data is being collected and used.  These firms, such as the Chicago Tribune and Los Angeles Times, are blocking users rather than complying with the law, according to the site.