FinCEN Director: Agency Receives 1,500 Suspicious Activity Reports on Crypto per Month

Kenneth A. Blanco, director of the U.S. Financial Crimes Enforcement Network, has revealed that the agency has seen a surge in filings of crypto-related Suspicious Activity Reports.

The director outlined FinCEN's ongoing role in regulation and law enforcement for the emerging crypto space, which it coordinates in tandem with the Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission.

As indicated in FinCEN's March 2013 guidelines, any acceptance or transfer of value that substitutes for fiat currency - including crypto - is considered to be money transmission, and entails specific regulatory obligations under the U.S. Bank Secrecy Act.

As money transmission businesses, crypto exchanges are therefore required to report both SARs and Currency Transaction Reports, as well as to comply with anti-money laundering and countering the financing of terrorism frameworks.

Blanco clarified that identical obligations pertain to businesses that provide anonymizing services - often dubbed "Mixers" or "Tumblers" - that seek to conceal the source of the transmission of crypto.

Exchanges located outside of the U.S. but that nonetheless do business in part with residents of the country are also monitored by the agency.

The director gave the example of FinCENs action in 2017 against Russian crypto exchange BTC-e for flouting AML laws as a case in which SARs had "Played a critical role," with filings by both banks and other crypto exchanges providing crucial leads for law enforcement.

According to Blanco, FinCEN, BSA examiners and the Internal Revenue Service have examined over 30 percent of all registered crypto exchangers and administrators since 2014.

Blanco further devoted attention to initial coin offerings, stressing that while they may fall under overlapping jurisdictions of different U.S. regulatory agencies, their AML/CFT obligations remain "Absolute."

At a recent hearing on crypto and ICOs in Washington DC, Coinbase's Chief Legal and Risk Officer called out the gamut of American regulators - including the SEC, CFTC, IRS, and FinCEN - over an extreme "Lack of coordination" that he considered to be negatively impacting innovation.