FinCEN: Virtual Currency Exchangers Must Comply with BSA, AML Rules (May 7, 2015)
Virtual currency exchangers are not immune to anti-money laundering laws, FinCEN Director Jennifer Shasky Calvery said this week, after announcing a civil enforcement action against San Francisco-based Ripple Labs Inc. and subsidiary XRP II LLC, for allegedly violating, among other laws, several BSA requirements by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN. “Innovation is laudable, but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products,” Director Shasky Calvery said in a release announcing the civil enforcement action.
Ripple Labs agreed to only conduct XRP transactions through a registered MSB, implement and maintain an effective AML program, comply with the Funds Transfer and Funds Travel Rules, and implement enhancements to Ripple’s protocols to appropriately monitor all future transactions, along with other mandates. The company also was assessed a $700,000 penalty.
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” said IRS Criminal Investigation Chief Richard Weber. “Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”
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