Official – Crypto Firms must register under Bank Secrecy Act


SEC has been seeding fear among the crypto industry for the past few months.  This time, SEC, CFTC and FinCEN, three of the main US regulators aim to target the Crypto industry. In a joint statement, SEC, FinCEN and CFTC, announced that companies engaging in cryptocurrencies must register under the Bank Secrecy Act.

October 15, 2019, | AtoZ MarketsThree of the major financial regulators in the United States – the SEC, FinCEN, and CFTC – have issued a rare joint three-party statement on digital assets. The report emphasizes that people engaged in digital asset-related activities must comply with their AML/CFT obligations under BSA.

Crypto Firms AML Policies

Financial organizations with AML / CFT obligations involve futures commission merchants, registered CFTC brokers, SEC-registered investment dealers and mutual funds, and Money Services Businesses (MSBs) registered with FinCEN. These institutions must establish and implement adequate anti-money laundering programs, including diligence record keeping and reporting, especially suspicious activity. In addition, these groups required to track suspicious transactions and report them to the appropriate agency.

Agencies have said that digital assets for financial reporting objectives “include those instruments that may be qualified under applicable US law, such as securities, commodities and commodities-based instruments such as futures or swaps.

However, the general statement notes that even if the company qualifies digital assets for another term, but falls within what the BSA defines as such, the same rules still apply.

SEC President: Crypto firms must implement AML policies

Jay Clayton, President of the SEC, added: “Market participants who receive and engage payments or other transactions in digital assets should consider these transactions to pose similar or additional risks, including the risks of AML/CFT… (similar to) cash equivalent transactions and transactions in cash.”

For example, if a company works closer to the commodity side of crypto-currencies, its obligations are covered by the CEA. If an entity falls on the securities side, it has to comply with the securities laws and so on.

Recently, FATF has issued additional encryption rules. The ruling requires cryptocurrency and other anonymous portals to retain and send customer information to government parties.

The new rules seem to be an attempt to monitor suspicious transactions in the cryptocurrency space. However, businesses are struggling to comply with the new AML policy. It is not because they don’t want it, but because they have no other option.

First, this struggle is because cryptocurrencies were not built to be regulated. On the contrary, their philosophy remains the opposite: to exist outside the regulatory powers. More recently, the Internal Revenue Service (IRS) has released new tax guidelines for cryptocurrencies and blockchain hard forks.

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