October 30, 2019

The Travel Rule Is Not Enough If Crypto Gets Adopted

By Yaya J. Fanusie

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.

  • Commentary
    • August 15, 2022
    Sharper: Industrial Policy

    Lawmakers in Washington have increasingly pushed for legislation to address key industry vulnerabilities and better position the United States as a leader in critical technolo...

    By Anna Pederson, Drisya Antose & Hannah Kelley

  • Podcast
    • August 2, 2022
    The Cost of Economic War

    Sanctions, not bombs, have been the weapon chosen to take on the Putin regime. BBC speaks with macroeconomist Rachel Ziemba about the effectiveness of modern economic statecra...

    By Rachel Ziemba

  • Commentary
    • The Wilson Center
    • July 27, 2022
    Harnessing the Metaverse: States of All Sizes

    With the innovation of the metaverse and its capacity to support different methods of social interaction outside of our physical universe, there is opportunity for states to d...

    By Michael Greenwald

  • Commentary
    • July 27, 2022
    Want to Help Taiwan? Support a Muscular Japan

    Japan's political leadership must fight to sustain Abe's spirited internationalism, despite mixed political support at home....

    By Daniel Silverberg

View All Reports View All Articles & Multimedia