With the major withdrawal from the crypto industry and the price of Bitcoin (BTC) hitting new permanent highs several times over the past few months, the United States has updated its anti-money laundering / terrorist financing laws for cryptocurrencies.
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2020 Anti-Money Laundering Act and Corporate Transparency Act
Last December, the Senate approved the National Defense Powers Act, and passed the 2020 Anti-Money Laundering Act and the Corporate Transparency Act as part of the legislation.
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The Act expands and modernizes the Bank Secrecy Act (BSA) and the US AML / CFT system by:
Codify FinCEN’s current guidance on cryptocurrencies by expanding and revising many of the definitions and provisions for BSA to include “currency replacement value”. Consequently, it requires cryptocurrency companies to qualify as money senders, register with a financial crime network, and establish reporting and recordkeeping requirements for transactions with certain types of digital currencies, as outlined in the proposed regulations issued by FINCEN … (See below). ).
This requires many small businesses to provide FinCEN with useful business information.
Preventing any person from concealing or attempting to conceal, false or distorted information from a financial institution or to a financial institution, which is the main fact associated with the ownership or control of assets involved in a monetary transaction, if these assets are high-ranking foreign political figures or by any other person. a direct family member or close colleague of a political person of a Senior Foreigner and (2) The total value of assets involved in one or more financial transactions is at least US $ 1,000,000. ”
Set the number of whistleblowers – up to 30% of the fines are levied on the unit where the tip resulted in fines of more than $ 1 million – providing the necessary information about BSA AML / CFT violations.
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Proposed Rules for Cryptocurrencies to Combat Money Laundering and Terrorist Financing
Late last year, the Treasury Financial Crimes Network also released proposed rules for converting digital currencies or digital asset transactions in line with similar AML / CFT reporting requirements imposed by BSA on other financial institutions.
If the new rules are approved, AML / CFT entities, including payments that are linked to “external wallets” (not owned by a third-party financial system), will collect data on the parties involved in cryptocurrency transactions and report them if the transaction amount exceeds $ 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 cryptocurrency in the transaction.
Estimated value of the transaction in US dollars based on the current exchange rate at the time of the transaction.
Any payment instructions received from a customer of a financial institution.
The name and physical address of each counterparty for the financial institution’s customer transaction.
Other information about the counterparty may be indicated by the secretary as mandatory in the reporting form.
All other information that uniquely identifies the transaction and accounts and, as far as possible, the parties involved.
All transaction forms are completed or signed by the client of the financial institution.
The new rules will also require banks and financial services companies to report the same information about cryptocurrency transactions over USD 10,000 to FinCEN within 15 days from the date of said transaction. Structuring transactions to avoid reporting requirements in accordance with the proposed rules is strictly prohibited.
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According to the official press release, Minister Steven Mnuchin explained:
“This regulation addresses major national security concerns in the CVC [Convertible Virtual Currency] marketplace and aims to fill loopholes that attackers are trying to exploit in the filing and reporting system.”
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. Minister Mnuchin added: