Given the huge setback from the cryptocurrency industry and the fact that the price of Bitcoin (BTC) has hit new highs several times over the past few months, The United States has updated its laws against money laundering and terrorist financing with cryptocurrencies.
The Anti-Money Laundering Act 2020 and the Company Transparency Act
Last December, The U.S. Senate passed the National Defense Authorization Act and, as part of that legislation, the Anti-Money Laundering Act of 2020 and the Business Transparency Act.
The provisions of the Act expand and update the Banking Secrecy Act, or BSA and the regime AML / CFT (against money laundering and terrorist financing) from the USA:
- Codifying FinCEN’s existing guidelines on digital currencies by expanding and amending various definitions and provisions within the BSA to include “value substitute currency”. Therefore, cryptocurrency trading companies must qualify as money transmitters in order to register with the Financial Crime Control Network and set reporting and record-keeping requirements for transactions in certain types of digital currencies in the regulation proposals issued by FINCEN (see below).
- Encourage many smaller businesses to share beneficial ownership information with FinCEN.
- Prohibit any person from knowingly concealing or attempting to hide, falsify, or misrepresent any material fact relating to ownership or control of the assets involved in a monetary transaction if “(1) the A person or organization who owns or controls the asset is a senior foreign policy figure or member of the immediate family or a close associate of a senior foreign policy figure. “And” (2) the added value of the assets involved 1 or more monetary transactions are no less than $ 1,000,000. “
- Creating awards for whistleblowers (up to 30% of fines collected from a company where the complaint resulted in fines in excess of $ 1 million) who report actionable information on violations of the banking secrecy law.
Proposed AML / CFT Regulations for Cryptocurrencies
At the end of last year The US Treasury Department’s Financial Crime Control Network has also issued legislative proposals aimed at making transactions in digital assets or convertible currencies subject to similar money laundering and terrorist financing reporting requirements that the BSA imposes on other financial institutions.
New rules, if adopted, Companies covered by AML / CFT, including payments made with “non-custody wallets” (that are not held by a third party financial system) would be required to compile and report the identity of the parties involved in cryptocurrency transactions if the transaction exceeds the USD 3,000.
This information includes:
- Name and address of the customer of the financial institution.
- The type of cryptocurrency used in the transaction.
- The number of cryptocurrencies in the transaction.
- The time of the transaction.
- The estimated value of the transaction in US dollars at the exchange rate in effect at the time of the transaction.
- All money orders received from the customer of the financial institution.
- Name and physical address of each transaction counterparty of the customer of the financial institution.
- Other counter-information that the secretary may make mandatory on the report form.
- Any other information that uniquely identifies the transaction, accounts and, where reasonably available, the parties involved.
- Any form related to the transaction completed or signed by the client of the financial institution.
Under the new regulations, banks and money service providers must report the same information to FinCEN 15 days after the date of a reportable transaction for cryptocurrency transactions over USD 10,000. The structuring of transactions to avoid information requirements is strictly prohibited according to the proposed rules.
According to an official press release, Secretary Steven Mnuchin stated:
“This law addresses significant national safety concerns in the CVC market [moneda virtual convertible] and aims to fill the loopholes that malicious actors seek to exploit in the reporting and record keeping system. “
As a result of the COVID-19 pandemic Governments around the world have been forced to focus on integrating blockchain technology into their financial services. As secretary, Mnuchin added:
“The law, which applies to financial institutions and complies with existing requirements, is intended to protect national security, support law enforcement, increase transparency and at the same time minimize the impact on responsible innovation.”
On the other hand, FinCEN announced its intention to change the BSA’s overseas banking and financial account regulations to force U.S. individuals and entities to report cryptocurrencies as part of their overseas financial accounts if they have cryptocurrencies worth more than $ 10,000. with foreign financial service providers or providers of digital assets.
The views, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is an international tax attorney and accountant who writes frequently on tax, legal, and accounting issues for Tax Notes, Bloomberg BNA, other publications, and the OECD.