The US Treasury Department Is Urging Cryptocurrency Exchanges To Register With FinCEN

All US crypto exchanges must register with FinCEN, the agency’s Financial Crimes Enforcement Network, according to the US Treasury Department.

Janet Yellen’s Treasury asked all virtual asset service providers (VASPs), including crypto exchanges, to fulfill Bank Secrecy Act standards in a series of reports released last week.

The US Treasury Department is still concerned about ‘unhosted’ cryptocurrency wallets

The Treasury is concerned about cryptocurrency wallets that are hosted on personal devices such as smartphones or hardware wallets. These devices, known as “unhosted wallets,” may transport cryptocurrency without the involvement of a third party.

Transactions from VASP-controlled addresses to private addresses can be tracked. Unhosted wallets, on the other hand, can be used by criminals for illicit conduct involving regulated parties that aren’t subject to reporting regulations, such as the Bank Secrecy Act.

Financial service providers must follow tight anti-money laundering (AML) standards and report suspicious behavior under the Bank Secrecy Act.

When shipping value worth more than $3,000 on behalf of a customer, or issuing traveler’s checks or money orders for between $3,000 and $10,000 to a single customer in a single day, it necessitates record-keeping.

Due to lax compliance in some countries, the Treasury report expressed worry that overseas VASPs might not file suspicious activity reports (SARs).

Unhosted wallets, dark web services, and coin mixers, according to certain US Senators, can make it more difficult to monitor monies obtained by illegal financial behavior such as ransomware or, you guessed it, circumventing wartime sanctions.

FinCEN has always demanded that cryptocurrency exchanges register

Treasury’s articles were viewed as news by some outlets, such as Law360. The Treasury, on the other hand, has continuously advised crypto exchanges to register with FinCEN, with the first such advice dating back to 2013.

Last June, FinCEN released a report that looked at patterns in ransomware that targeted US infrastructure.

Russian agents allegedly collected crypto ransomware payments, which were typically conducted in Bitcoin, from assaults like SolarWinds’ Orion and the Colonial Pipeline, according to investigators.

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

FinCEN cited obstacles in tracking crypto funds generated by breaking the Bank Secrecy Act, which mostly relates to money laundering:

• Mixing services,
• decentralized exchanges,
• single-use crypto addresses,
• anonymity-enhanced cryptocurrencies like Monero,
• and jumping across blockchains through “chain-hopping.”

FinCEN’s efforts were bolstered in October when the Office of Foreign Asset Control (OFAC) published similar recommendations on sanctions compliance for the crypto industry.

A month later, the Treasury Department released a press release outlining its efforts to combat ransomware.

International ransomware operators, including Russian and Ukrainian persons, were identified and sanctioned by the agents. Although it acknowledged the legitimacy of cryptocurrency, it expressed concern about ransomware assaults on US infrastructure.

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