As we have previously reported, the U.S. Financial Crimes Enforcement Network (FinCEN) has taken the position that businesses in the virtual currency space may need to register with FinCEN as money services businesses, comply with obligations to file suspicious activity reports, and establish anti-money laundering programs.
Earlier this year, FinCEN assessed a $110 million civil money penalty against BTC-e, a foreign-based virtual currency exchange doing business in the U.S., as well as a $12 million civil money penalty against its alleged Russian operator, Alexander Vinnik, for willfully violating U.S. anti-money laundering laws.
Due in part to FinCEN's enforcement actions, concerns are mounting about the potential use of virtual currencies for money laundering and financing terrorism. For example, in October 2017, the CEO of BlackRock characterized bitcoin as an "index for money laundering"; the governor of the United Arab Emirates' central bank stated that bitcoin "can be easily used in money laundering and in funding terror activities"; and the U.S. Drug Enforcement Agency wrote in its annual National Drug Threat Assessment that transnational criminal organizations are "increasingly using virtual currencies due to their anonymizing nature and ease of use."
Perhaps it is no surprise, then, that non-U.S. governments are expressing interest in more tightly regulating virtual currency businesses in order to prevent money laundering and the financing of terrorism. According to recent reports, the British government is negotiating to amend the European Union's Fourth Anti-Money Laundering Directive to bring virtual currency exchange platforms and custodian wallet providers into compliance with anti-money laundering and counter-terrorist financing laws.
The European Union negotiations are expected to conclude in late 2017 or early 2018. Stay tuned.
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