January 25, 2021

FinCEN Extends Comment Period For Rule Aimed At Closing Anti-money Laundering Regulatory Gaps For Certain Convertible Virtual Currency And Digital Asset Transactions

On Thursday, January 14th, 2021, the Financial Crimes Enforcement Network (FinCEN) announced that it was reopening the comment period for its recent proposed rulemaking regarding certain transactions involving convertible virtual currency (CVC) or digital assets with legal tender status (LTDA).

Under the Notice of Proposed Rulemaking (NPRM), banks and money services businesses (MSBs) would be required to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN.

Specifically, FinCEN is providing an additional 15 days for comments on the proposed reporting requirements regarding the information on CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in a jurisdiction identified by FinCEN. FinCEN provides an additional 45 days for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.

Any of the following methods may submit comments:

  • Federal E-rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Refer to Docket Number FINCEN-2020-0020 and the specific RIN number 1506-AB47 to which the statement applies.
  • Mail: Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-2020-0020 and the specific RIN number

Why is this important for your organisation?

Given the increasing popularity of digital currencies as an asset class, organisations such as FINCEN are developing regulations to govern their use. The US is one of Africa’s most important trading partner. Therefore firms and institutions on the continent need to participate and influence this process mostly because US regulations significantly influence international standards in the long term. Indeed, this development is part of a broader push by advanced economies and international financial organisations to regulate Bitcoin markets and reduce their use for money in laundering, terrorism financing and other unlawful purposes. Therefore:

  • Organisations within the industry that seek to influence these regulations’ should indeed send the comments as requested to be considered by FINCEN. This allows FINCEN to propose regulations that  promote integrity within the industry without compromising innovation.
  • Organisations should examine their internal compliance controls framework to ensure that their digital currency activities do not contravene anti-money laundering regulations or pose any form of security risks.

You can learn more here.

Share on social media:
Facebook
Twitter
LinkedIn
Telegram