May 18, 2020

FinCEN director addresses AML concerns in cybercurrency transactions

In a May 13, 2020 address to the Consensus Blockchain Conference, Director of the Financial Crimes Enforcement Network Kenneth Blanco described the dual role of FinCEN in the US national security apparatus, as primary administrator of the Bank Secrecy Act, and as the Financial Intelligence Unit for the US. The primary focus of the Director’s address was the so-called Travel Rule.  Noting that record keeping violations are the most oft-cited problems encountered by the Internal Revenue Service in its investigations of money services business engaged in virtual currency transmission, Blanco lauded the adoption in June 2019 of the Interpretive Notes to Recommendation 15 by the Financial Action Task Force.  Recommendation 15 provides that the reporting requirements of the Travel Rule contained in FATF Recommendation 16 apply to virtual currency exchanges.

In addition to the Travel Rule and opportunities for collaboration between industry and law enforcement, Blanco’s address focused on FinCEN’s efforts to provide guidance to firms dealing with virtual currency during the COVID-19 pandemic.  He reviewed the two notices issued by FinCEN in March and April 2020 advising financial institutions to be on the lookout for malicious or fraudulent transactions, and to follow FinCEN advisories regarding the types of fraud, theft and money laundering activities occurring or likely to occur during the pandemic.   Likewise, Blanco warned of cybercriminals using COVID-19 as a lure, and exploiting vulnerabilities created by work-at-home policies.

FinCEN remarks