For the first time ever, anti-money laundering (AML) rules have been enforced by the Financial Crimes Enforcement Network (FinCEN). The agency has penalized a “peer-to-peer cryptocurrency exchanger” for breaking AML rules. Bitcoin trader penalized for breaking AML laws.
It was disclosed by the U.S. regulator last month, that during 2012–2014, California resident and cryptocurrency trader, Eric Powers, failed to comply with the Bank Secrecy Act’s (BSA) registration and reporting requirements.
FinCEN said that Powers had not registered himself as a money transmitter or as a money services business while he bought and sold bitcoin on the internet.
In addition, any suspicious transactions in cryptocurrency and fiat currency were not reported by him. FinCEN alleged that without filing a single currency transaction report, Powers completed approximately 160 bitcoin transactions worth roughly $5 million and also conducted over 200 transactions involving the physical transfer of more than $10,000 in currency.
Powers also processed several suspicious transactions, including business related to the darknet marketplace Silk Road, without ever filing a suspicious activity report.
According to the agency, Powers has admitted to the crimes.
Kenneth A. Blanco, FinCEN director, said that “Obligations under the BSA apply to money transmitters regardless of their size.”
It was claimed by Blanco that there were indications that Powers “specifically was aware of these obligations, but willfully failed to honor them,” adding:
“Such failures put our financial system and national security at risk and jeopardize the safety and well-being of our people, as well as undercut responsible innovation in the financial services space.”
Powers has been fined $35,000, as a consequence, and is prohibited from providing money transmission services.
FinCEN ruled in 2014, that under U.S. law, bitcoin payment processors and exchanges are money services businesses. Last year, the regulator said initial coin offerings or ICOs, are also subject to money transmitter rules.