FinCen Deputy Director remarks on Cryptocurrency

[TravelMug]

Prepared Remarks of FinCEN Deputy Director Jamal El-Hindi, delivered at the SIFMA 20th Anti-Money Laundering (AML) and Financial Crimes Conference

On that point, let me take this opportunity to emphasize that actors working in these new systems for moving value are subject to the same AML principles and requirements as other financial institutions.  Social media and messaging platforms and others now focusing on the establishment of cryptocurrencies cannot turn a blind eye to illicit transactions that they may be fostering.  As we’ve said on other occasions, to the extent that the financial sector chooses to move forward with the opportunities that some of these emerging systems present, we are not going to allow it to slide backward on the protections and appropriate transparency that we have collectively worked so hard to weave into the financial system.

We will judge emerging financial institutions on whether and how they make their systems resilient to, and report on, money laundering, terrorist financing, sanctions evasion, human and narco-trafficking, and other illicit activity.

Make no mistake about it, whether it is through existing rules and guidance or future rules and guidance, we will regulate in this space consistent with the existing principles underlying the BSA/AML regime.  Industry will have to develop its new products and services to ensure appropriate transparency for law enforcement and national security purposes.  And where that doesn’t happen, we have the ability to protect our financial system. 

https://www.fincen.gov/news/speeches/prepared-remarks-fincen-deputy-director-jamal-el-hindi-delivered-sifma-20th-anti

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

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[squatter]

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

I don't think he's alluding to that. The Deputy Director was just talking tough.

FinCEN already published pretty sweeping guidance on VASPs last year. I believe it was the first time since 2013 that they had done so. Aside from the occasional enforcement action, I don't expect to hear anything new from them anytime soon.

[bbc.reporter]

@TravelMug. I speculate that there will be more unwanted and stricter KYC demanded on users. Exchanges and other services are the chokepoint from the cryptospace to the fiatspace and vice versa. They will certainly do more choking.

[Ucy]

Well, if a Blockchain or a decentralized platform does the jobs outlined in the statement, there will be no need for inferences. We will monitor ourselves by the way. If a government demands transparency, itself must be transparent so that we will together make the world a better place.

I see some interesting conditions given  to Blockchain/decentralized ecosystem. That will will probably work best on very transparent platforms. When a decentralized community receives credible info (with strong proofs) on governments or persons breaking the laws, we will we definitely apply needed sanctions.

We probably need only the activities of security agencies on decentralized platforms to be partially or fully hidden. But the data/informations they generate will need to be very immutablity, just incase there is need to go through it in the future.

[malevolent]

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

Social media and messaging platforms and others now focusing on the establishment of cryptocurrencies

Cryptocurrencies are lumped here with social media (and by social media they probably mean facebook with its Libra), and messaging platforms, so here they probably have Wechat Pay and the like in mind. Exchanging or dealing with cryptocurrencies themselves is already pretty tightly regulated, as evidenced by the link squatter has posted above.

[Baofeng]

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

I don't think he's alluding to that. The Deputy Director was just talking tough.

FinCEN already published pretty sweeping guidance on VASPs last year. I believe it was the first time since 2013 that they had done so. Aside from the occasional enforcement action, I don't expect to hear anything new from them anytime soon.

Yep, they just wanted to send the message again and to reiterate their stance and action on cryptocurrency, from exchanges to Bitcoin ATM's. So doesn't surprised me at all, the thing is, as regulations are already set in full motion already.

[DarkDays]

Oh look, another idiot who puts cryptocurrencies in the context of "money laundering, terrorist financing, sanctions evasion, etc"

Ridiculous.

Do these people not know that cash money are far more untraceable than most cryptocurrencies, and that it is used for the bulk of money laundering efforts?

I'm done paying attention to what any of these idiots say, none of them are ever truly up to speed on the current situation and still have thoughts of Bitcoin in its earliest days.

Stop paying them attention and they'll soon go away.

[blckhawk]

Do these people not know that cash money are far more untraceable than most cryptocurrencies, and that it is used for the bulk of money laundering efforts?

Paper cash might be used that way, such as money laundering, etc., but banks and other entities utilizing cash money store logs digitally, including one's identity records. Even if the money is dispersed, there's a greater percentage of conviction once identities have been revealed, and it interconnects upon investigation, solving a case.

Unlike in cryptocurrencies that is pretty much straighforward in most cases, transact here, stay anonymous as long as you don't participate in any third-party implementing AML/KYC.

[bbc.reporter]

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

I don't think he's alluding to that. The Deputy Director was just talking tough.

FinCEN already published pretty sweeping guidance on VASPs last year. I believe it was the first time since 2013 that they had done so. Aside from the occasional enforcement action, I don't expect to hear anything new from them anytime soon.

Yep, they just wanted to send the message again and to reiterate their stance and action on cryptocurrency, from exchanges to Bitcoin ATM's. So doesn't surprised me at all, the thing is, as regulations are already set in full motion already.

It might also not be in full motion, however. Exchanges and other services might add more KYC from users because they are ordered by the regulators.

I predict that they will begin asking for income tax statements, proof of employment and other employment information. The cryptospace might not be a place for the unemployed and the unbanked in a few years hehehe.

[chip1994]

Prepared Remarks of FinCEN Deputy Director Jamal El-Hindi, delivered at the SIFMA 20th Anti-Money Laundering (AML) and Financial Crimes Conference

On that point, let me take this opportunity to emphasize that actors working in these new systems for moving value are subject to the same AML principles and requirements as other financial institutions.  Social media and messaging platforms and others now focusing on the establishment of cryptocurrencies cannot turn a blind eye to illicit transactions that they may be fostering.  As we’ve said on other occasions, to the extent that the financial sector chooses to move forward with the opportunities that some of these emerging systems present, we are not going to allow it to slide backward on the protections and appropriate transparency that we have collectively worked so hard to weave into the financial system.

We will judge emerging financial institutions on whether and how they make their systems resilient to, and report on, money laundering, terrorist financing, sanctions evasion, human and narco-trafficking, and other illicit activity.

Make no mistake about it, whether it is through existing rules and guidance or future rules and guidance, we will regulate in this space consistent with the existing principles underlying the BSA/AML regime.  Industry will have to develop its new products and services to ensure appropriate transparency for law enforcement and national security purposes.  And where that doesn’t happen, we have the ability to protect our financial system. 

https://www.fincen.gov/news/speeches/prepared-remarks-fincen-deputy-director-jamal-el-hindi-delivered-sifma-20th-anti

Based on what the Deputy Director says, I interpret it that there will be full regulations as far as crypto-currencies goes. It will be implemented and will be sweep. Although each countries has it's own set of regulatory framework, but with this statement, we might see a single governing laws.

Thoughts?

In fact, this is not too new and governments are setting up new laws to prevent people from buying and selling crypto in the country. In Asia, there are already some such strict countries and those who pay with crypto will have to go to jail with money laundering offenses.
2 days ago I heard about having crypto payments in some European countries and the total volume was up to $ 4 billion and that would not be a small number. If hundreds of thousands of entrepreneurs realized that they could launder money to evade taxes in this way, the world economy would certainly be in big trouble. I don't want the economic crisis to happen, it's too painful for our years of efforts.

[davis196]

This guy says nothing new.Just the same old statements about the regulatory clerks going to fight money laundering,terrorism and financial crimes(they are losing the fight so far) and all private crypto related businesses that are obliged to support that fight against crime,by providing all sensitive information of their customers.He isn't talking about new regulations.The crypto businesses that refuse to follow the rules will be punished.I don't find anything wrong with that.

[bbc.reporter]

This is only a budget proposal, however, if approved on both the lower house and the upper house of congress, it might be the beginning of an erdication in the cryptospace in America. Anyone they do not like, they will disallow.



U.S. President Donald Trump’s $4.8 trillion budget proposal for FY 2021, released Monday, seeks to expand the Treasury Department’s cryptocurrency oversight by returning the United States Secret Service, now a division of the Department of Homeland Security, to its jurisdiction.

The reshuffling would “create new efficiencies” in the Secret Service’s investigation of criminal acts involving cryptocurrencies and the financial marketplace, the executive report reads. It will also give Treasury more fire power to, as the budget reads, “disrupt terrorist financing, hold rogue states and human rights abusers accountable, and detect and deter financial crimes.”

The Secret Service is better known for protecting U.S. presidents and their families, but it is also responsible for investigating a wide range of financial crimes including fraud and counterfeiting, among others.

At Treasury, the Secret Service’s cryptocurrency investigations could dovetail with the Financial Crimes Enforcement Network (FinCEN), a money-laundering watchdog that monitors cryptocurrency-related violations of the Banking Secrecy Act.

DHS, the Secret Service and branches within the Treasury Department have already spent millions of dollars on blockchain analytics, tapping Chainalysis to provide software tools and services.

Read in full https://www.coindesk.com/trumps-2021-budget-proposal-seeks-to-optimize-crypto-policing

[bbc.reporter]

Are there already countries where the cryptocoin exchanges ask for your income tax returns, employment information, source of other income and the address of your homes?

America might be the first.



U.S. Treasury Secretary Steven Mnuchin told Congress on Wednesday that the U.S. Financial Crimes Enforcement Network (FinCEN) is set to release new requirements related to cryptocurrencies.

Mnuchin offered few details on the move when speaking before the Senate Finance Committee. However, he remarked that "specifically on cryptocurrencies, we are spending a lot of time on this, on both an interagency basis and with the regulators."

“We're about to roll out some significant new requirements at FinCEN," he said during the hearing, though he offered no specifics on the timing of the move.

Read in full https://www.theblockcrypto.com/post/55734/trump-administration-to-release-new-fincen-requirements-for-cryptos-mnuchin-tells-congress

[squatter]

U.S. Treasury Secretary Steven Mnuchin told Congress on Wednesday that the U.S. Financial Crimes Enforcement Network (FinCEN) is set to release new requirements related to cryptocurrencies.

I put my foot in my mouth on that one. I honestly thought things would be quiet at FinCEN, at least until the next administration came into office.

Mnuchin is being vague, but if I had to guess, he's referring to the implementation of the FATF travel rule. I forgot that the FATF's soft deadline for implementation was June 2020.

[bbc.reporter]

@squatter. I do not know all the details, however, all the news articles about it already points to something bad for the cryptospace.

In any case, have you heard of this latest arrest? The American government should not win this and begin to set it as a binding example of what they can use for other cases. This will be bad for the cryptospace and bad our mandatory human right to privacy.

I reckon they will use this to impose themselves over us.



US DOJ Calls Bitcoin Mixing ‘a Crime’ in Arrest of Software Developer

Larry Harmon was arrested earlier this week for allegedly participating in a money-laundering conspiracy worth more than $300 million in cryptocurrency involving darknet marketplace AlphaBay. However, the family of the Coin Ninja CEO claims he was never involved with AlphaBay.

Harmon’s case raises pressing questions about developer liability in the crypto industry.

In addition to the crypto media site Coin Ninja, Harmon created the bitcoin mixer Helix, which sends transactions out in mixed batches so individual payments are harder to trace. In its indictment, Department of Justice prosecutors refer to Helix as a “money transmitting and money laundering business.”

“Helix enabled customers, for a fee, to send bitcoins to designated recipients in a manner which was designed to conceal and obfuscate the source or owner of the bitcoins,” the indictment continues. “This type of service is commonly referred to as a bitcoin ‘mixer’ or ‘tumbler.’”

Read in full https://www.coindesk.com/us-doj-calls-bitcoin-mixing-a-crime-in-arrest-of-software-developer

[hatshepsut93]

Do these people not know that cash money are far more untraceable than most cryptocurrencies, and that it is used for the bulk of money laundering efforts?

Of course they know how much cash is used in crime, which is why they push for cashless society and also tighten the control over cash transactions whenever they can.

I'm done paying attention to what any of these idiots say, none of them are ever truly up to speed on the current situation and still have thoughts of Bitcoin in its earliest days.

Stop paying them attention and they'll soon go away.

Who will go away? AML regulators? It's like saying "ignore the cops, they can't arrest you if you don't pay attention to them".

IMO it's important to listen to what they say, because these organization have the potential to influence crypto in a bad way - tighten KYC policies of exchanges, tell exchanges which coins to list and so on.

[squatter]

@squatter. I do not know all the details, however, all the news articles about it already points to something bad for the cryptospace.

In any case, have you heard of this latest arrest?

US DOJ Calls Bitcoin Mixing ‘a Crime’ in Arrest of Software Developer
https://www.coindesk.com/us-doj-calls-bitcoin-mixing-a-crime-in-arrest-of-software-developer

That interpretation (that "mixing is a crime") is misleading. Let's unpack what the DOJ actually said.

Helix was linked to and associated with “Grams,” a Darknet search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet as a way to conceal transactions from law enforcement.

Like the Bestmixer.io case, the operator advertised his service specifically as a money laundering service. He also partnered directly with at least one darknet marketplace, which creates a conspiracy to launder money:

Helix partnered with the Darknet market AlphaBay to provide bitcoin laundering services for AlphaBay customers.

These elements don't exist for many other mixers, although the unlicensed money transmission charges could apply. The operator living and operating from the US made it infinitely easier for the DOJ to investigate and arrest him.

[bbc.reporter]

@squatter. Agreed. However, if the department of justice wins this case, it appears that they can refer to any mixer as a money transmitting and money laundering business.

They should not win this. Our privacy is a basic right.

[tbterryboy]

Right from time I have known that cryptocurrency wouldn’t escape regulation. Cryptocurrency is good but some people keep ruining everything because they keep making use of cryptocurrencies to carry out illicit transactions since they know that they wouldn’t get caught by making use of it.

But, I still don’t see the possibilities of the government controlling cryptocurrencies that are fully decentralized like Bitcoin, because there are no Central authorities for these coins. They will only be able to regulate it through centralized exchanges like Coinbase, but it’s not everyone that makes use of centralized exchanges. But whatever, let’s wait and see.

[squatter]

@squatter. Agreed. However, if the department of justice wins this case, it appears that they can refer to any mixer as a money transmitting and money laundering business.

According to FinCEN regulations released last May, the book is already closed on the money transmission question. Similar to exchanges, FinCEN registration (at a minimum) is technically required to do business with US customers.

Money laundering charges are different. They require facts that prove a conspiracy to launder money. Advertising your mixer as a money laundry service and directly partnering with illicit marketplaces probably qualifies. Advertising your mixer as a privacy/fungibility tool probably doesn't.