As reported in the Wall Street Journal, Senior Treasury Department officials are warning cryptocurrency trading platforms on the dangers of currency "mixing" as a means of money laundering.
Elizabeth Rosenberg, the Treasury assistant secretary for terrorist financing and financial crimes, said in a speech Friday that "the challenge is that while these services often operate as money transmitters and thus have regulatory reporting obligations, they may deliberately operate in a noncompliant manner to make it more difficult for regulators and law enforcement to trace illicit funds,"
Taylor English attorney Bryan Jacoutot and I discussed this same concern in our podcast on FinCEN Report recently. Jacoutot's white paper on cryptocurrencies highlights the regulatory challenges involved. FinCEN regulates money transmitting businesses under its authority through the Bank Secrecy Act.
The challenge for many FinTech start-ups is their failure to realize that their activities fall within FinCEN's definition of a "money transmitting business" that compels them to adopt anti-money laundering safeguards and procedures.
Failing to register with FinCEN as a "money transmitting business" can result in substantial fines and criminal penalties.
Bloomberg's statements signal FinCEN's enduring interest in regulating money transmitting businesses, including cryptocurrency exchanges that can facilitate person-to-person value transfers.
About The Author
Jonathan Wilson is the co-founder of FinCEN Report Company with 31 years of experience in corporate, M&A and securities matters. He is the author of The Corporate Transparency Act Compliance Guide (to be published by Lexis Nexis in the summer of 2023) and the Lexis Practical Guidance Practice Note on the Corporate Transparency Act.