FinCEN Receives Over 1.5k Suspicious Activity Reports Per Month on Cryptocurrency


The U.S. Financial Crimes Enforcement Network (FinCEN) receives in excess of 1,500 Suspicious Activity Reports (SARs) every month.

The revelation was made by Kenneth A. Blanco, the director of the regulatory body. He said that the government agency has of late been inundated by an increasing number of complaints and filings related to suspicious activities in the crypto industry.

The remarks by the FinCEN director came during a speech he made on August 9 at the 2018 Chicago-Kent Block Legal Tech Conference August 9.

Mr. Blanco highlighted the growing role being taken by the agency. He touched on the role it plays in the thorny issue of regulatory compliance and law enforcement within the cryptocurrency landscape.

He outlined FinCEN’s collaboration with other government agencies like the U.S Securities and Exchange Commission (SEC) as well as the Commodity Futures Trading Commission (CFTC).

The director pointed out that although innovation in financial services could be seen as something of great importance, there was the need to be cognizant of the fact that financial crimes keep on evolving alongside these innovations.

It’s also important to note that these concerns could be a result of the innovation, which in turn creates numerous opportunities exploited by criminals and other bad elements. These bad actors could include terrorists and rogue states.

Blanco said that:

“[We] see the industry developing new techniques for identifying suspicious activity in virtual currency, showing us what is possible and giving us unique insight into certain financial crimes.”

His remarks also pointed out that the agencies help to identify and investigate the illegal activities, thus making it possible for the crypto industry to “focus on legitimate applications and innovations”.

The speech highlighted that this was one way of stamping out the negative perceptions that virtual currencies are driving the dark web and enabling bad actors.

The FinCEN boss also urged that all players put emphasis on the issue of security while striving to safeguard the great milestones reached via innovations.

He noted that to help nurture the fintech industry, all players should strive to remain compliant with all regulatory measures put in place.

He further dove into how critical regulatory compliance was, stating that with innovation, “harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”

FinCEN’s 2013 guidelines remain and state that whenever there’s any form of transaction that includes other forms other than fiat currency is money transmission.

It, therefore, means that all transactions involving cryptocurrency fall in the same category and are thus subject to regulatory oversight under the U.S. Bank Secrecy Act (BSA).

This is what informs all money transmission businesses (MSBs), including cryptocurrency exchanges and trading platforms to submit reports of Suspicious Activity Reports as well as Currency Transaction Reports (CTRs).

Also critical is that these MSBs remain compliant with Anti-Money Laundering (AML) regulations.

It’s upon that basis that the agency took action against crypto exchange BTC-e in 2017. The platform was reported to have contravened AML laws, with SARs playing a vital role in the eventual crackdown on the exchange.

According to Blanco, the increase in SARs doesn’t mean most MSBs are compliant. He said that the agency was often surprised by businesses that decide to seek regulatory requirements in the aftermath of notifications from the agency.

He emphasized this by saying that: “Let this message go out clearly today: This [waiting for a notice] does not constitute compliance.”

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