The notable Director of the Financial Crimes Enforcement Network (FinCEN) Kenneth Blanco stated that cryptocurrency companies are not above the AML laws. The well-known leader shared his views while addressing an audience at a fintech event organized at the Georgetown University Law Center.
Mr. Blanco remarked that the entities which deal in digital assets are subject to the Bank Secrecy Act, irrespective of the fact that the digital asset in concern is a stablecoin, centralized, or decentralized crypto. During his interaction, he asserted that the implementation of such rules and regulations is necessary as there breathes a potential possibility that the individuals who keep themselves under the veil as the party on the other side of the crypto deal might be indulged in some kind of illegal activities like human smuggling.
With the growing acceptance of cryptocurrencies as strong financial assets, the regulatory bodies from around the world have pulled up their socks to maintain strong control over the crypto firms and exchanges. Blanco’s strategic mention of the AML and KYC rules for crypto lies in sync with the purview of the governing authorities from around the world.
One of the most significant rules drafted out by the authorities is the execution of the Financial Action Task Force’s highly acclaimed “Travel Rule” for digital assets transactions. This rule complies with the crypto exchanges to track the key details of the cryptocurrency transactions amounting to over $1,000. The exchange should maintain critical information about the recipient, the sender, the amount of the transaction, and a few other facts and figures.
Though these guidelines are not mandatory, the negligence of these rules by the countries can make them lose certain financial benefits or may face condemn from FATF member countries. A group of 15 countries, which comprises of the U.S and the members of the G7, announced earlier that they are gearing up to launch a centralized solution for tracking transactions concerning crypto. The project is likely to be unveiled and available for implementation within the coming years.
Apart from maintaining high standards of rules and regulations, the crypto exchanges worldwide have also started the delisting of cryptocurrencies, which fail to fall within the regulatory parameters. Recently, OkEx crypto exchange delisted an array of privacy coins from its platforms. The delisted coins included Dash (DASH), Monero (XMR), Super Bitcoin (SBTC), Horizen (ZEN), and Zcash (ZEC).
With every passing moment, the crypto regulators are pulling back the strings of the exchanges in order to foster a system that ensures safety, reliability, and transparency to the clients. As FATF rules come into effect, it is likely that other crypto trading platforms launch their set of rules, which make the KYC norms even more stringent.
Also, there have been taken strict actions against Bitcoin mixing services. Mixers are used by fraudsters to avoid getting into the sight of the authorities and analytics firms. In the early phase of the current year, Bestmixer, which operated as a cryptocurrency privacy-enhancing platform, was forced to halt its operations by Europol and its partners. The platform was accused of “money laundering services, and falsely claimed to be domiciled in Curacao where they claimed it was a legal service.”
In August, the White House gave a warning stating that cryptocurrencies like Bitcoin, Ethereum, Bitcoin Cash, Monero, etc., are aiding narcotics smuggling in a big way. Later, the Treasury blacklisted the digital addresses of Xiaobing Yan, Fujing Zheng, and Guanghua Zheng, the Chinese drug dealers.
With such strict control over the crypto domain, as is seen in the case of Facebook’s highly controversial Libra project, by the government bodies and regulators, there hovers a risk of uncertainty over this new-age payment and trading system.