FinCEN fines Bitcoin trader $35,000 for AML and BSA breaches

The US’ Financial Crimes Enforcement Network (FinCEN) has fined a Bitcoin trader $30,000 for breaching the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements.

Following an investigation, FinCEN has found Eric Powers failed to register as a money services business and did not have written policies or procedures for BSA compliance or report suspicious transactions and currency transactions.

Powers served as a peer-to-peer exchanger of cryptocurrency, including Bitcoin, but laws state that money transmitters must meet BSA requirements. These include registering with FinCEN, developing, implementing and maintaining AML structures, filing suspicious activity reports (SAR) and currency transaction reports (CTR), and maintain certain records.

He had advertised his services of buying and selling Bitcoin, having completed over 200 transactions. These incidents involved physically sending or receiving physical money in person through the mail or at a depository institution.

Many of these deals were reportedly suspicious, including deals over the darknet, but no SARs were filed to identify if funds were derived from illegal means.

Over 200 transactions had included the physical transfer of $10,000. Of these, 160 purchases were worth around $5m in Bitcoin purchases and physical cash-transactions were made in public places such as coffee shops. All of these deals would have needed a CTR filed, but none were.

As a result of this, Powers has been fined $35,000 and has agreed to an industry bar which prohibit him from providing money transmission services or similar activity.

FinCEN director Kenneth Blanco said. “Obligations under the BSA apply to money transmitters regardless of their size. It should not come as a surprise that we will take enforcement action based on what we have publicly stated since our March 2013 Guidance—that exchangers of convertible virtual currency, such as Mr. Powers, are money transmitters and must register as MSBs.

“In fact, there were indications that Mr. Powers specifically was aware of these obligations, but wilfully failed to honour them.  Such failures put our financial system and national security at risk and jeopardize the safety and well-being of our people, as well as undercut responsible innovation in the financial services space.”


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