October 30, 2019
The Travel Rule Is Not Enough If Crypto Gets Adopted
Last week, at a large fintech conference in Washington, DC, the head of the Financial Crimes Enforcement Network (FinCEN), the arm of the U.S. Treasury Department that enforces anti-money laundering (AML) laws, gave a grave warning to the cryptocurrency space. FinCEN Director Kenneth Blanco stressed that any company that claims its technology can not comply with current AML regulations will not be able to do business in U.S. jurisdiction. However, because the crypto space is evolving faster than regulators, such warnings are not enough to address the scope of money laundering and terrorist financing risk that is likely to arise if cryptocurrencies become a common form of retail payment.
Blanco was specifically talking about complying with the U.S. Bank Secrecy Act (BSA), the statute that all banks and money service businesses must follow in order to hinder illicit financial flows. The BSA requires financial institutions to implement various controls and file various reports with FinCEN to flag activities that may indicate money laundering.
The FinCEN director was also referring to crypto firms’ need to follow the “travel rule,” a BSA requirement for money transmitters to record identification information on all parties in fund transfers between financial institutions. Many in the crypto space have been up-in-arms about the travel rule requirement because cryptocurrency transfers do not intrinsically capture personal identification data. Slowly, however, the industry is contemplating various solutions to help crypto exchanges to identify users on both ends of a transfer.
Read the full article in Forbes.
More from CNAS
-
Marco Rubio Is Rebooting the Neocons for the MAGA Era
Commentary
This article was originally published in Bloomberg. In his infamous guide to ruling, Niccolò Machiavelli also offers a warning to ambitious advisers: Power belongs to the pri...
By Chris Kennedy
-
CNAS Insights | Why the United States Needs Economic Coercion Doctrine
Commentary
Economic tools now sit at the center of U.S. global competition. Sanctions, export controls, investment restrictions, and financial measures are employed with a frequency and ...
By LtCol Mary Hossier
-
Commentary
Transatlantic Security / Energy, Economics & Security
Want to Stop Trump Bullying Your Country? RetaliateThis article was originally published in The Guardian. In February of last year, Donald Trump convened the first full cabinet meeting of his second term in the White House. He...
By Edward Fishman
-
Unpacking the Trump Administration’s Plans for Venezuela’s Oil Revenue
Commentary
This article was originally published in Lawfare. Since removing Venezuelan dictator Nicolás Maduro from power, President Trump has made clear that he intends to “get the oil...
By Alex Zerden
