WASHINGTON—A virtual currency guidance and advisory issued by the U.S. Treasury Department’s anti-money laundering (AML) unit has clarified regulatory expectations and signaled a potential new global standard for combating financial crime, experts say.
“The documents also have the potential to prompt a knee-jerk reaction — and account closures — by banks wary of the risks associated with serving virtual currency firms,” JD Supra stated.
The interpretive guidance and advisory issued by Treasury’s Financial Crimes Enforcement Network (FinCEN) serve as “both a warning and a road map for risk management,” Juan Llanos, a consultant on financial technology and regulatory technology matters, said.
In announcing the advisory, Sigal Mandelker, Treasury under-secretary for terrorism and financial intelligence, outlined Treasury’s plan to assist financial institutions in their fight against money laundering and terrorist financing. “Treasury is committed to helping financial institutions better detect and prevent bad actors from exploiting convertible virtual currencies for money laundering, sanctions evasion, and other illicit activities,” Mandelker said in a statement. “The comprehensive advisory FinCEN issued today highlights the risks associated with darknet marketplaces, peer-to-peer exchanges, unregistered money services businesses, and CVC kiosks and identifies typologies and red flags to help the virtual currency industry protect its businesses from exploitation.”
‘No New Expectations’
The statement added that the guidance “does not establish any new regulatory expectations” and “consolidates current FinCEN regulations, guidance and administrative rulings.” FinCEN in 2011 was the first financial regulator in the world to oblige virtual currency firms to have anti-money laundering programs and report suspicious activity, which it achieved by defining these businesses as money transmitters, JD Supra said.