In a speech at the 2018 Chicago-Kent Block Legal Tech Conference August 9, the director of the U.S. Financial Crimes Enforcement Network (FinCEN), Kenneth A Blanco talked about the number of crypto-related complaints. He said the number of Suspicious Activity Reports (SARs) complaints filed to the company has gone past 1500 per month.
Role of FinCEN
Further, Blanco talked about FinCEN’s role in law enforcement and regulation of the currently blooming crypto area. Currently, it is coordinated in the level with the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC). He was quoted saying,
“[While] innovation in financial services can be a great thing… we also must be cognizant that financial crime evolves right along with it, or indeed sometimes because of it, creating opportunities for criminals and bad actors, including terrorists and rogue states.”
Blanco also highlighted the point that to safeguard the fintech frontier’s “incredible innovations”, the compliance of the actors’ with the specific regulatory measures is essential, provided that “harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”
March 2013 Guidelines
FinCEN’s March 2013 guidelines indicate that any acceptance or transfer of value that substitutes for fiat currency including cryptocurrency is considered to be money transmission. Moreover, it entails specific regulatory obligations under the U.S. Bank Secrecy Act (BSA). Crypto exchanges are also required to report SARs and Currency Transaction Reports (CTRs). They should also comply with anti-money laundering (AML) and counter the financing of terrorism (CFT) frameworks similar to money transmission businesses (MSBs). He also gave an example of FinCEN’s action in 2017 against Russian crypto exchange BTC-e. Blanco said that the SARs “played a critical role” as the filings by the banks and other crypto exchanges provided an important lead for the enforcement of the law.