The Financial Crimes Enforcement Network ("FinCEN") provided guidance on the application of Bank Secrecy Act money transmission regulations to business models involving convertible virtual currencies ("CVCs"). FinCEN also issued an advisory to assist financial institutions in identifying and reporting suspicious activity relating to the use of CVC technologies for criminal purposes.
FinCEN said its guidance on CVCs does not introduce any new requirements. The guidance was created to consolidate rules, administrative rulings and guidance issued since 2011 that apply to business models involving CVCs, including peer-to-peer ("P2P") exchangers and cryptocurrency wallet providers.
Separately, FinCEN warned financial institutions of ways in which bad actors may use CVCs for money laundering, sanctions evasion and other illicit activities. FinCEN also identified red flags that typically indicate illicit conduct in darknet marketplaces (i.e., websites that require specific software access), unregistered P2P exchangers, foreign-located money service businesses and CVC kiosks.
FinCEN noted that, when investigating illicit CVC-related conduct and capturing it in a suspicious activity report, it is especially helpful for financial institutions to provide certain information to law enforcement, including:
virtual currency wallet addresses;
relevant transaction history;
available login information (including IP addresses);
mobile device information (such as device IMEI); and
information from the customer’s public online profile and communications.