One of the most attractive aspects of cryptocurrencies is the privacy they provide. While every cryptocurrency is traceable, as there is a record of all transactions, they are not linked to a person’s identity – no matter how many times they use the same address. In addition, most cryptocurrencies provide users with anonymity. This means that users’ identities are not linked to their transactions.
FinCEN’s recent publication of its first Cryptocurrency Anti-Money Laundering (AML) and Terrorism Financing Risk Assessment (TFR) Report is quickly becoming one of the most talked-about documents in the cryptocurrency world.
As you know, cryptocurrencies are a hot industry these days. And as more and more people decide to get into it, the need for the financial authorities of the world to make sure that no money is being made illegally, increases. In its latest action, the U.S. Federal Bureau of Investigation has issued a warning to the world on the dangers of cryptocurrencies, such as those issued by Bitcoin, and their use for the purchase of illegal items.
The U.S. Financial Crimes Enforcement Network will continue to closely monitor the cryptocurrency sector as one of its top priorities in the fight against crimes such as money laundering.
On Thursday, FinCEN officially announced that dealing with virtual currencies, or transactions involving cryptocurrencies such as Bitcoin (BTC), will be among the top national priorities for combating terrorist financing and ensuring adequate anti-money laundering measures.
The establishment of these priorities is intended to support all covered institutions in their efforts to meet their obligations under the relevant laws and regulations, the regulator said. FinCEN said it will soon issue regulations specifying how financial institutions should incorporate these priorities into their AML programs.
FinCEN recognizes that not all priorities will be relevant to all affected institutions, but each institution should consider and integrate, as appropriate, each priority based on the institution’s risk-based AML program after the effective date of any future rule issued in connection with those priorities, the agency said.
FinCEN refers to cryptocurrencies as convertible virtual currencies, or CVVs, and notes that these assets have become the currency of choice in a variety of illegal online activities. The agency went on to discuss the wide range of uses of CVCs by criminal entities, arguing that CVCs are the preferred form to purchase illicit goods, such as ransomware, or even to promote activities, such as the ambition to make nuclear weapons.
For example, since 2019, cyber actors affiliated with North Korea have likely stolen hundreds of millions of dollars in CVC value through cyber operations against CVC service providers, laundered the stolen CVC value through other CVC service providers and CVC portfolios, and used the proceeds to fund weapons of mass destruction and ballistic missile programs, FinCEN writes.
Related: Former Chainalysis director becomes interim director of FinCEN
This news coincides with recent comments by Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence. During a Senate hearing in late June, Nelson said he would push for implementation of the Anti-Money Laundering Act of 2020, including some new rules regarding cryptocurrencies.
FinCEN’s increased focus on the cryptocurrency industry comes months after President Joe Biden froze the FinCEN-backed rule to control cryptocurrencies on stand-alone wallets as one of the president’s first official acts. The proposal was introduced by the agency in late 2020 under former US Treasury Secretary Mnuchin and included a requirement for all banks and money firms to report and verify the identity of customers involved in cryptocurrency transactions.
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