Shearman & Sterling LLP | FinReg | US Authority Settles Charges Against Peer-to-Peer Virtual Currency Exchanger for Violating Registration and AML Requirements
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  • US Authority Settles Charges Against Peer-to-Peer Virtual Currency Exchanger for Violating Registration and AML Requirements
    04/18/2019
    The U.S. Treasury Department's Financial Crimes Enforcement Network has announced that it has settled charges against Eric Powers, a peer-to-peer exchanger of convertible virtual currency, for violating the registration, program and reporting requirements of the Bank Secrecy Act. This marks FinCEN's first enforcement action filed against a peer-to-peer exchanger of virtual currency and represents the first time that FinCEN has disciplined an exchanger of virtual currency for failure to report currency transactions, as required under the Bank Secrecy Act.

    According to the order, Powers operated as an exchanger of convertible virtual currency in accordance with FinCEN's 2013 guidance and conducted over 1,700 virtual currency transactions as a money transmitter from December 2012 through September 2014. Such activity required Powers to register with FinCEN as a money services business; however, he "wilfully" neglected to do so, and additionally failed to develop, implement and maintain an effective written anti-money laundering program, detect and adequately report suspicious transactions and report currency transactions.

    Powers agreed to pay a $35,000 fine and to an industry bar that prohibits him from providing money transmission services or engaging in any other activity that would qualify him as a "money services business" under FinCEN regulations.

    FinCEN Director Kenneth Blanco in an accompanying statement added that the enforcement action "should not come as a surprise" given the 2013 guidance and his August 2018 remarks, where he emphasized that virtual currency exchangers are subject to AML rules and FinCEN registration requirements.

    View FinCEN's announcement.

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