- FinCEN director says banks should also consider crypto risk exposures.
- Banks and cryptocurrency exchanges have to adopt effective AML policies.
- FinCEN will examine the effectiveness of banks AML program when assessing them
Money laundering is being perpetrated with digital currencies and it has become a major concern for many regulators and authorities around the world. While emphasizing the need to crackdown money laundering with cryptocurrencies, one of the officials from the US FinCEN, urged banks to seriously consider the risk exposure associated with digital currencies.
FinCEN warns banks of crypto risks
The director of the agency, Kenneth Blanco, reminded financial institutions that it is also their obligation to ensure illegal cashing out of funds is controlled, by adopting adequate anti-money laundering measures. Blanco made this known during the recent virtual conference held in Las Vegas which was centered on addressing money laundering challenges.
The statement of the FinCEN director was in accordance with the agency’s rule (FIN-2019-A003). The law informed that it is the obligations of every bank and financial institution to monitor and report dubious transactions that relate to money laundering, and other illegal activities, including sanction-evading transactions.
The need for effective AML policies in banks and crypto exchanges
Especially for cryptocurrency, the FinCEN director urged financial institutions to review their AML policies and measures. However, it appears that many banking institutions still do not know how digital currencies affect them, and as such, may relent in adopting effective AML strategies. Blanco said the can easily tell that banking institutions are neglecting these risks whenever they are examined.
Blanco opined that cryptocurrency exchanges are not the only entities that should be concerned about risk exposures that relate to digital currencies. Banking institutions also need to consider the crypto exposure. FinCEN and other examiners will critically assess how banks are effectively managing the risks via AML policies, said the Blanco
There have been reported cases where retails banks exchanged cryptocurrencies for cash with illegal money service businesses (MSBs). Noteworthily, the US authorities are not slacking from actively policing such deals. Cryptopolitan has reported several cases where the Justice Department charged several crypto-related money laundering businesses. Most recently, a Bulgarian national was charged for allegedly facilitating money laundering through his cryptocurrency exchange dubbed RG Coin crypto exchange.
