Crypto regulation: FinCEN Fines Virtual Currency Exchanger

The Financial Crimes Enforcement Network (FinCEN) announced last week that it has fined Eric Powers, the operator of a peer-to-peer exchanger of convertible virtual currency, for willfully violating the Bank Secrecy Act’s (BSA) registration, program and reporting requirements and therefore failing to comply with crypto regulation. This is the first time FinCEN takes an enforcement action against a P2P virtual currency exchange, and the first instance where the bureau has penalized an exchanger of virtual currency for its failure to file Currency Transaction Reports (CTRs). This decision paves the way for other country with similar regulations, like Singapore where a new Payment Services Act was implemented recently, to enforce such sentences. Mr Powers was served with a $35,000 fine and agreed to be barred from the industry. From now on, he will not be able to provide money transmission services or engage in any activity that would make him a “Money Service Business” (MSB). This penalty was the result of his failure to register as an MSB and to have the appropriate measures in place to ensure he was complying with the BSA. The agency also discovered that he failed to report suspicious transactions and currency transactions. He conducted transactions involving the physical transfer of more than $10,000 in currency but did not file a CTR, just like he did not file a Suspicious Activity Report (SAR) while processing suspicious transactions. FinCEN Director Kenneth A. Blanco commented: “Obligations under the BSA apply to money transmitters regardless of their size. Exchangers of convertible virtual currency, such as Mr. Powers, are money transmitters and must register as MSBs.” It is time crypto exchangers develop their AML and KYC procedures and on boarding policies, as they are now more than ever monitored by regulatory institutions. Argus can help put such compliance policies together and make sure your company is in line with the latest crypto regulation. To read more on this story, click here. Date: 22nd April 2019  



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