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
-
U.S.-China Competition Accelerates Across the Tech Stack
Congressional Testimony
This article was originally published in Just Security. Over the course of 2025, the United States and China rapidly escalated trade and tech restrictions toward each other, t...
By Geoffrey Gertz
-
Fortress North America: Mexico’s Role in Securing the Region’s Economic Future
Commentary
Executive Summary Economic security has become the new organizing principle of global trade policy, reflecting a fundamental shift in how states define and defend their econom...
By Diego Marroquín Bitar
-
It’s Complicated...
Commentary
Introduction The United States is Canada’s closest economic and security partner. While both countries share many interests, neither their interests nor the means they use to ...
By Jeff Mahon & Wolfgang Alschner
-
Moving On From Free Trade with Mark DiPlacido
Podcast
Geoff sits down with Mark DiPlacido of American Compass to discuss his recent series of essays, On Balance, that advocates U.S. trade policy should move away from the previous...
By Geoffrey Gertz
