US Updates AML / CFT Crypto Laws

Against great pressure from the crypto industry and as the price of Bitcoin (BTC) has hit new highs several times over the past two months, the United States has updated its cryptocurrency laws Anti-Money Laundering / Fight against the financing of terrorism.

Related: COVID-19 Pandemic Boosts Crypto Law Updates In J5 Countries

The 2020 Anti-Money Laundering Law and the Company Transparency Law

Last December, the Senate approved the National Defense Authorization Law and, as part of this law, adopted the Anti-Money Laundering Law of 2020 and the Company Transparency Law. .

Related: EU amends AML laws for crypto trading as US reflects

The provisions of the law expand and update the Bank Secrecy Act, or BSA, and the US AML / CFT regime by:

• Codify the existing FinCEN guidelines for digital currencies by expanding and modifying several definitions and provisions of the BSA to include “a value which replaces money”. Thus, it requires companies that operate with cryptocurrencies to qualify as money transmitters to register with the Financial Crimes Enforcement Network and establish reporting and record keeping requirements for transactions involving certain types of digital currencies, as detailed in the proposed regulations published by FINCEN (see below).
• Require many small businesses to disclose beneficial ownership information to FinCEN.
• Prohibit a person from knowingly concealing or attempting to conceal, falsify or distort, at a financial institution or a financial institution, any material fact concerning the ownership or control of assets involved in a monetary transaction if “(1) the person or the entity that owns or controls the asset is a prominent foreign political figure, or any immediate family member or close associate of a prominent foreign political figure “and” (2) the total value of the assets involved in one or more monetary transactions is not less than $ 1,000,000. “
• Creation of whistleblower rewards – up to 30% of monetary penalties recovered from an entity where the tip led to penalties in excess of $ 1 million – that flag actionable information about breaches of BSA in AML / CFT matters

Related: Better Regulation Needed To Stop Crypto Tax Cheats From Raging

Proposal for a regulation on AML / CFT crypto-currencies

At the end of last year, the Financial Crimes Enforcement Network of the US Department of the Treasury also released draft regulations aimed at subjecting transactions of convertible digital currencies or digital assets to similar imposed AML / CFT reporting requirements. to other financial institutions by the BSA.

The new regulation, if adopted, would require entities covered by AML / CFT, including payments involving “non-hosted wallets” (not held by a third-party financial system), to obtain and report the identity of the parties involved. in cryptocurrency transactions if the transaction exceeds $ 3,000.

This information would include:

• The name and address of the financial institution’s customer.
• The type of cryptocurrency used in the transaction.
• The amount of cryptocurrency in the transaction.
• The time of the transaction.
• The assessed value of the transaction, in US dollars, based on the exchange rate in effect at the time of the transaction.
• Any payment instructions received from the customer of the financial institution.
• The name and physical address of each counterparty to the financial institution’s client transaction.
• Other information on the counterparty that the secretary may prescribe as mandatory on the declaration form.
• Any other information that uniquely identifies the transaction, the accounts and, to the extent reasonably available, the parties involved.
• Any form relating to the transaction that is completed or signed by the client of the financial institution.

The new regulations will also require banks and money services businesses to report the same information for cryptocurrency transactions over $ 10,000 to FinCEN 15 days from the date a reportable transaction takes place. Structuring transactions to avoid reporting obligations is strictly prohibited under the proposed rules.

Related: U.S. crypto regulations will take Bitcoin back to its digital cash origins

According to an official press release, Secretary Steven Mnuchin explained:

“This rule addresses important national security concerns in the CVC [convertible virtual currency] market, and aims to fill gaps that malicious actors seek to exploit in the record keeping and reporting regime.

In the wake of the COVID-19 pandemic, governments around the world have been forced to focus on integrating blockchain technology into their financial services. As Secretary Mnuchin added:

“The rule, which applies to financial institutions and complies with existing requirements, aims to protect national security, assist law enforcement and increase transparency while minimizing the impact on responsible innovation.

Related: Cybercrime Task Force overseeing the global digital financial system

Separately, FinCEN has announced plans to change BSA regulations on foreign banks and financial accounts to require U.S. individuals and entities to report cryptocurrency as part of their foreign financial accounts if they have over $ 10,000 in cryptocurrency from foreign financial or digital service providers.

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