Kenneth A. Blanco, director of the U.S.[1] Financial Crimes Enforcement Network (FinCEN[2]), has revealed that the agency has seen a surge in filings of crypto-related Suspicious Activity Reports (SARs). The number of complaints now exceeds 1,500 per month, according to him.
Blanco’s remarks were made as part of a speech[3] he delivered at the 2018 Chicago-Kent Block Legal Tech Conference August 9.
The director outlined FinCEN’s ongoing role in regulation and law enforcement for the emerging crypto space, which it coordinates in tandem with the Securities and Exchange Commission (SEC[4]) and the U.S. Commodity Futures Trading Commission (CFTC[5]). He noted that,
“[While] innovation in financial services can be a great thing… we also must be cognizant that financial crime evolves right along with it, or indeed sometimes because of it, creating opportunities for criminals and bad actors, including terrorists and rogue states.”
Blanco emphasized that in order to safeguard the “incredible innovations” of the fintech frontier, actors’ compliance with specific regulatory measures is critical, given that “harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”
As indicated in FinCEN’s March 2013 guidelines, any acceptance or transfer of value that substitutes for fiat currency - including crypto - is considered to be money transmission, and entails specific regulatory obligations under the U.S. Bank Secrecy Act (BSA).
As money transmission businesses (MSBs), crypto exchanges are therefore required to report both SARs and Currency Transaction Reports (CTRs), as well as to comply with anti-money laundering (AML[6]) and countering the financing of terrorism (CFT) frameworks.
Blanco clarified that identical obligations pertain to
