The Financial Crimes Enforcement Network (FinCEN) today issued guidance entitled, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (CVC). FinCEN is the enforcement branch of the US Department of Treasury.
The guidance issued today does not establish any new regulatory expectations. FinCEN said that it consolidates regulations, guidance and administrative rulings that relate to money transmission involving virtual currency, and applies the same interpretive criteria to other common business models involving CVC.
The guidance is said to be in response to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of multiple variations of businesses dealing in CVCs.
Additionally, FinCEN issued an Advisory on Illicit Activity Involving Convertible Virtual Currency to assist financial institutions in identifying and reporting suspicious activity related to criminal exploitation of CVCs for money laundering, sanctions evasion, and other illicit financing purposes.
The advisory seeks to identify information that would be most valuable to law enforcement if contained in suspicious activity reports.
Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said that Treasury is committed to helping financial institutions to detect and prevent bad actors from exploiting cryptocurrency for money laundering, avoiding government sanctions and other illicit activities.
“The comprehensive advisory FinCEN issued today highlights the risks associated with darknet marketplaces, peer-to-peer exchangers, unregistered money services businesses, and CVC kiosks and identifies typologies and red flags to help the virtual currency industry protect its businesses from exploitation.”
“The money transmitter definition we published in 2011 and the guidance we issued in 2013 clarifying how that definition applies to transactions involving virtual currency have proven to be exceptionally durable. Our regulatory approach has been consistent and despite dynamic waves of new financial technologies, products, and services, our original concepts continue to hold true. Simply stated, those who accept and transfer value, by any means, must comply with our regulations and the criminal misuse of any methodology remains our fundamental concern.”
FinCEN’s rules define certain businesses or individuals involved with CVCs as money transmitters subject to the same registration requirements and a range of anti-money laundering, program, recordkeeping, and reporting responsibilities as other money services businesses.
FinCEN Advisory CVC FINAL 508_0
FinCEN Guidance CVC FINAL 508