FinCEN Boss: American Regulators to Strictly Enforce AML in Crypto Industry

November 18, 2019

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The American government plans to crack and enforce new rules that will require cryptocurrency exchanges and wallet providers to share information about their customers, Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN), said last week at a conference hosted by Chainalysis, a New York-based blockchain analysis company.

According to a recent Reuters report, a slice of the anti-money laundering regulations will require cryptocurrency exchanges to verify their customers’ identities, identify the original parties and beneficiaries of transfers of $3,000 or higher, and transmit that information to counterparties if they exist. They are calling it the “travel rule”.

“It (travel rule) applies to CVCs (convertible virtual currencies) and we expect that you will comply period,” Blanco said at a conference hosted by Chainalysis, a New York-based blockchain analysis company.

“That’s what our expectation is. You will comply. I don’t know what the shock is. This is nothing new,” he added.

According to the Reuters article, the move comes after guidelines released in June by the U.S. Treasury led-Financial Action Task Force (FATF), an inter-governmental global organization devoted to battling money laundering and terrorist financing. FATF likewise directed crypto exchanges and regulators around the world to comply with the travel rule, giving them about a year to do it from June this year.

“FinCEN…has been conducting examinations that include compliance with the funds’ travel rule since 2014,” Blanco said, adding that it is the most commonly cited violation with regard to money service businesses engaged in virtual currencies.

According to a news article from Blockchain News earlier this year, cryptocurrency thefts, scams and fraud may exceed $4.3 Billion For 2019. And the CipherTrace Q2 2019 Cryptocurrency Anti-Money Laundering (AML) Report revealed that regulators were already threatening an end to anonymity with the “Travel Rule” earlier this year.

“Although exchanges, wallets and other cryptocurrency custody services are strengthening their defences, hackers continue to innovate and outpace even the current state of the cybersecurity art. Even Binance, the world’s number-one cryptocurrency exchange, lost tens of millions of crypto assets to a breach perpetrated by sophisticated hackers using a lethal cocktail of phishing, viruses and other attack vectors. In total, cybercriminals looted $125 million in Bitcoin, Ethereum and other digital assets from exchanges this quarter. However, CipherTrace based this theft number on the price of the assets at the time they were stolen. In actuality, given the recent price movement of Bitcoin and other tokens, this value is likely much greater since they tripled in value during Q2 2019. Additional exit scams, thefts and dark market takedowns still under investigation could push the total losses much higher.”

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About Richard Kastelein

Founder and publisher of industry publication Blockchain News (EST 2015), a partner at ICO services collective Token.Agency ($750m+ and 90+ ICOs and STOs), director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of some two dozen Blockchain startups and has written over 2500 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat. Irish Tech News put him in the top 10 Token Architects in Europe.

Kastelein has an Honorary Ph.D. and is Chair Professor of Blockchain at China's first Blockchain University in Nanchang at the Jiangxi Ahead Institute of Software and Technology. In 2018 he was invited to and attended University of Oxford's Saïd Business School for Business Automation 4.0 programme. He has over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the European Commission's SME Instrument programme as a startup assessor and as a startup judge for the UK government's Innovate UK division.

Kastelein has spoken (keynotes & panels) on Blockchain technology at over 50 events in 30+ citiies. He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, 'The Hitchhiker's Guide to the Seas' travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he's raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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