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Americans are cautioned against using Bitcoin money-transmitting services by the Federal Bureau of Investigation (FBI) in the United States. A federal law registration for these services as Money Services Businesses (MSBs) is required.
The government recommends that People be cautious and refrain from unintentionally using non-compliant services. These companies could be the target of legal action, which could affect users’ finances.
Compliance with Anti-Money Laundering Regulations
The FBI’s warning highlights the importance of complying with anti-money laundering (AML) regulations outlined in 31 USC § 5330 and 31 CFR §§ 1010 and 1022.
These laws mandate that cryptocurrency money-transmitting services register as MSBs and adhere to specific requirements, such as collecting clients’ Know Your Customer (KYC) information.
The agency emphasizes that the mere presence of a cryptocurrency service in an app store does not guarantee its legality or compliance with federal requirements.
The FBI advises people to visit the Financial Crimes Enforcement Network (FinCEN) website of the US Treasury Department to confirm a company’s registration status. Coinbase and Kraken (doing business as Payward Financial Inc.) are among the registered MSBs listed on this website.
Risks of Using Non-Compliant Services
The FBI’s statement highlights the potential consequences of using unregistered cryptocurrency money-transmitting services.
Recent law enforcement operations conducted by the agency against non-compliant entities have resulted in financial disruptions for users, particularly if their cryptocurrencies became commingled with funds acquired through illicit means.
Individuals who utilize services that fail to fulfill their legal obligations risk losing access to funds following law enforcement actions against these entities.
The agency advises caution when using cryptocurrency platforms known to be utilized by criminals for money laundering activities and avoiding services that openly advertise themselves for illegal purposes.
Crackdown on Crypto Mixers
The US government has been clamping down more on cryptocurrency mixers, which have been used to hide the trail of illegal money, and the FBI has issued a warning about this.
The Office of Foreign Asset Control (OFAC) of the Treasury Department placed sanctions on the Blender.io mixer in response to events similar to the 2022 Axie Infinity attack. Furthermore, addresses associated with Tornado Cash were added to the Specially Designated Nationals list.
The CEO and founders of Samourai Wallet were arrested by the US Department of Justice (DOJ), which made headlines more recently. This Bitcoin wallet, renowned for emphasizing secrecy, was charged with money laundering over $100 million.
The DOJ worked with law enforcement organizations in Portugal and Iceland to apprehend one of Samourai Wallet’s creators and confiscate the company’s web servers, domain name, and mobile application.
Conclusion
The FBI’s alert serves as a reminder of the need to follow regulations and the increased scrutiny the cryptocurrency business faces.
Individuals and companies involved in digital assets must prioritize compliance and take necessary precautions. This is crucial as law enforcement intensifies illegal activity and non-compliant services crackdowns.
Not doing so could have serious repercussions, such as legal action and financial issues.
The cryptocurrency community and regulators must collaborate to create a transparent and safe system to protect innovation and reduce the dangers connected with illicit activity.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
