Against the great setback of the crypto industry and because the price of Bitcoin (BTC) has reached new highs several times over the past few months, the United States has updated its cryptocurrency money laundering / fight against the financing of terrorism laws. .
Related: COVID-19 pandemic leads to updates of crypto-legislation in J5 countries
The Anti-Money Laundering Act of 2020 and the Corporate Transparency Act
Last December, the Senate approved the National Defense Authorization Act and, as part of the legislation, passed the Money Laundering Act by 2020 and the Corporate Transparency Act.
Related: EU amends crypto-trading AML laws as US reflects
The provisions of the law broaden and update the Banking Secrecy Act, or BSA, and the US AML / CFT regime by:
- Codify existing FinCEN guidelines regarding digital currencies by extending and changing various definitions and provisions within the BSA to include ‘currency replacement currency’. This requires companies operating in cryptocurrency to qualify as money senders to register with the Financial Crimes Network and to set reporting and record keeping requirements for transactions involving certain types of digital currencies, as set out in proposed regulations issued by FINCEN ( see below).
- Requires many smaller businesses to disclose beneficial ownership information to FinCEN.
- Prohibits anyone from knowingly concealing or attempting to conceal or propose to a financial institution any material fact relating to the ownership or control of assets involved in a money transaction, if ‘(1) the person or entity controlling the owner or control of which the assets are a senior foreign political figure, or any immediate relative or close partner of a senior foreign political figure ‘and’ (2) the total value of the assets involved in 1 or more money transactions is not less than $ 1,000,000. ‘
- The awarding of awards to whistleblowers – up to 30% of fines recovered from an entity where the fee resulted in fines of more than $ 1 million – reporting relevant information on BSA AML / CFT violations.
Related: Better regulation is needed to prevent crypto-tax evaders from going wild
Proposed AML / CFT cryptocurrency regulations
At the end of last year, the US Treasury Department’s financial crime network also issued proposed regulations to subject the convertible digital currency or digital asset transactions to similar AML / CFT reporting requirements that the BSA imposes on other financial institutions.
The new regulations, if adopted, will require entities covered by AML / CFT, including payments related to ‘unvested wallets’ (not held by a third-party financial system), the identity of parties obtained and report on cryptocurrency transactions. more than $ 3,000.
This information will include:
- The name and address of the client of the financial institution.
- The type of cryptocurrency used in the transaction.
- The amount of crypto-currency in the transaction.
- The time of the transaction.
- The fixed value of the transaction, in US dollars, based on the prevailing exchange rate at the time of the transaction.
- Any payment instructions received from the financial institution’s client.
- The name and physical address of each counterparty to the transaction of the client of the financial institution.
- Other information about the other party may be prescribed by the secretary on the report form as mandatory.
- Any other information that uniquely identifies the transaction, the accounts and, to the extent reasonably available, the parties involved.
- Any form related to the transaction completed or signed by the client of the financial institution.
The new regulations also require banks and money laundering companies to report the same information for cryptocurrency transactions of more than $ 10,000 to FinCEN 15 days from the date of a notifiable transaction. The structure of transactions to avoid the reporting requirements is strictly prohibited under the proposed rules.
Related: US cryptocurrencies will bring Bitcoin back to its original digital cash
According to an official press release, Secretary Steven Mnuchin explained:
‘This rule addresses significant issues of national security in the CVC [convertible virtual currency] market, and aims to reduce the gaps that malicious actors want to exploit in the record and reporting regime. ”
As a result 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, is intended to protect national security, aid law enforcement and increase transparency, while minimizing the impact on responsible innovation. “
Related: Cybercrime Task Force Monitoring Global Digital Financial System
Separately, FinCEN announced its intention to amend the BSA’s regulations for foreign bank accounts and financial accounts to oblige US individuals and entities to report cryptocurrency as part of their foreign financial accounts if they have more than $ 10,000 in foreign currency cryptocurrencies. financial or digital asset service providers.
The views, thoughts and opinions expressed here are the author’s own and do not necessarily reflect the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is an international tax attorney and certified public accountant who regularly writes on tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.