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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
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
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