US Treasury urges crypto exchanges to register with FinCEN

 CRYPTO.News

The US Treasury has made an announcement that all US crypto exchanges must be registered with FinCEN, the agency's Financial Crimes Enforcement Network.

In a series of reports set out last week, Treasury Janet Yellen urged all virtual asset service providers (VASPs), including crypto exchanges, to follow the rules of the Bank Secrecy Act.

The order comes just days after Russia launched its offensive into Ukraine.

Cryptopayments that the Treasury believes increase the risk of illicit activity.

.coinbase later announced that it had blacklisted 25,000 crypto wallets connected to Russia prior to the attack.

Every crypto exchange must also employ a dedicated head of compliance.

.Crypto payments claimed by the Ministry of Finance increase the risk of illicit activity.

Calculations still on 'unhosted' crypto wallets

The US Treasury department expressed concern about crypto wallets hosted on personal devices such as smartphones or hardware wallets.

These devices, “unhosted wallets,” can transmit crypto without third-party guidance.

allows to track transactions from a VASP controlled address to a private address.however, the Treasury Department states criminals can misuse unhosted wallets for illicit activities involving regulated parties who have no reporting requirements, a la the Bank Secrecy Act.

The bank Secrecy Act requires financial service providers to implement strict anti-money laundering (AML) protocols and report suspicious activity.

this requires recording when sending a value of more than $3,000 on behalf of a customer, or issuing traveler's checks or money orders between $3,000 and $10,000 to a single customer in one day.

The Ministry of Finance report expressed concern that foreign VASPs would not file suspicious activity reports (SARs) due to weak compliance in some countries.

some US Senators are also concerned that unhosted wallets, dark web services, and coin mixers could make it difficult to track funds obtained through illicit financial activities such as ransomware or — you guessed it — evading wartime sanctions.

finCEN always wants crypto exchanges to register

Some outlets, such as Law360, view Treasury publications as news.

But the Treasury has consistently urged crypto exchanges to register with FinCEN, with the earliest guidance starting in 2013.

A FinCEN report published last June tracks trends in ransomware targeting US infrastructure.

Investigators alleged that Russian agents accepted crypto ransomware payments, usually made in Bitcoin, stemming from attacks such as Orion SolarWinds and Colonial Pipeline.

almost invariably, ransomware hackers demand payment in crypto due to the practical difficulty of reversing crypto transactions.

FinCEN cites barriers to tracking crypto funds generated in violation of the Bank Secrecy Act, most of which are related to money laundering:

1. ..mixing service,

2. decentralized exchange,

3. Disposable crypto addresses,

anonymity-enhanced cryptocurrencies such as Monero,

and jump over the blockchain via “chain-hopping.”

in October, the Office of Foreign Asset Control (OFAC) supported FinCEN's efforts by publishing similar guidance on sanctions compliance for the crypto industry.

One month later, the Ministry of Finance issued a press release detailing the effo.

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