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


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.”