Jennifer Shasky Calvery, a director of FinCEN (The Financial Crimes Enforcement Network), a bureau of the U.S. Department of the Treasury that collects and analyzes information about financial transactions in order to withstand domestic and international money laundering, terrorist financing, and other financial crimes, spoke at the annual West Coast Anti-Money Laundering Forum in San Francisco, CA on May 6th, 2015. Ms. Shasky Calvery updated the public on some of the work FinCEN is doing, including the bureau’s ongoing work in the digital currency space.
Looking back, on May 5th FinCEN imposed a $700,000 civil money penalty against a digital currency business Ripple Labs Inc. and its wholly-owned subsidiary, XRP II, LLC. The case is that the company failed to register with FinCEN as a money services business, and to implement an adequate anti-money laundering program.
Then, after Ripple Labs created and registered a subsidiary, that entity – XRP II – failed to have an effective anti-money laundering program and failed to report suspicious financial transactions.
“Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws. Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products,” said Ms. Shasky Calvery.
She explained that the regulatory framework for money services businesses, which include digital currency exchangers and administrators, has been in existence for years. FinCEN issued guidance about two years ago, noting that digital currency exchangers and administrators are “money transmitters” under the Bank Secrecy Act (BSA) and its implementing regulations. Consequently, they are required to register with FinCEN as a money services business and institute certain recordkeeping, reporting, and anti-money laundering program measures.
As said by Ms. Shasky Calvery, the bureau’s team of experts work very hard to preserve with the quickly evolving technology in this area:
“They share what they have learned through extensive training efforts with law enforcement, regulators, and prosecutors domestically and globally. These are the people who are on the front lines of investigating illegal use of emerging payment systems. They also share their experiences with industry so that companies will be able to avoid being compromised by unlawful actors, and being used as a vehicle for illicit finance.”
Furthermore, Ms. Shasky Calvery added that FinCEN recently launched a series of supervisory examinations of businesses in the digital currency industry. She considers that the exams will help FinCEN determine whether digital currency exchangers and administrators are meeting their compliance obligations under the applicable rules.
About Jennifer Shasky Calvery
Jennifer Shasky Calvery has served as director of FinCEN since September 23, 2012. As director, Ms. Shasky Calvery oversees FinCEN’s wide-ranging work to protect the U.S. financial system from money laundering and other forms of illicit financial activity and to advance the national security interests of the United States.
About West Coast Anti-Money Laundering Forum
The conference is planned and implemented by a group of volunteers from a cross section of the financial industry and law enforcement. Since it is not a profitable enterprise, attendance fees are always reasonable. The press is not invited to the conference so speakers and attendees can be unbiased in their remarks without fear of a side effect.
According to the conference’s website, the participants of the West Coast Anti-Money Laundering Forum gain knowledge and develop a synergy and network that promotes success for each participant in their career as it relates to the goal of preventing or detecting and stopping money laundering, terrorism and other financial crimes.