Fincen Conducting Bank-Style BSA Exams of Virtual Currency Firms
U.S. authorities have fined the San Francisco startup $700,000 over violations of the Bank Secrecy Act, according to the Financial Crimes Enforcement Network's Tuesday press release.May 5
Two small U.S. banks will begin offering an alternative remittance option. The development may signal a new era of competition in foreign exchange, but some critics see danger.September 24
WASHINGTON Financial Crime Enforcement Network Director Jennifer Shasky Calvery said Wednesday that Internal Revenue Service examiners are conducting banklike exams of virtual currency firms for possible anti-money-laundering violations.
"These exams will help Fincen determine whether virtual currency exchangers and administrators are meeting their compliance obligations under the applicable rules," Calvery said in prepared remarks to a group of anti-money-laundering professionals in San Francisco.
Her speech comes just after the agency levied a $700,000 fine against prominent virtual currency company Ripple Labs on Tuesday night for alleged violations of the Bank Secrecy Act, including failing to report suspicious activity.
Calvery first mentioned the exams earlier this year while speaking on a panel at a Council on Foreign Relations event on cryptocurrency policy, but the remarks were not widely known.
"We went through and did training for them late last year and they have now begun their examination so that now get us to the next step to give businesses out there an idea of what expectations are and what is going to work and what isn't and further develop the industry," Calvery said during the February panel.
During the speech on Wednesday at the West Coast Anti-Money Laundering Forum, Calvery said "virtual currency exchangers like all members of regulated industry must bring products to market that comply with our anti-laundering laws.
"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," she said.
Fincen issued guidance in 2013 which said that it classified virtual currency companies as money transmitters and therefore they must abide by all BSA and anti-laundering requirements.
"When individuals create a new company in an existing regulatory framework they have an obligation to make their products, their services to comply with that preexisting regulatory framework," Calvery said on the earlier panel at the Council for Foreign Affairs.