FinCEN Fines Money Services Business for AML and Sanctions Violations

A money services business settled FinCEN charges for willfully failing to register with the agency and maintaining an ineffective anti-money laundering program.

FinCEN found that the firm, which operated a peer-to-peer cryptocurrency marketplace and wallet service, failed to maintain its registration as a money services business for nearly three years. FinCEN alleged that, despite processing billions of dollars in transactions, the firm did not implement a written anti-money laundering program until four years after it began operations.

According to the Consent Order, the firm actively solicited business from high-risk merchants, including a website known for facilitating prostitution and human trafficking. The agency stated that although employees recognized the illicit nature of the traffic, the firm processed over $24 million related to this website without filing a single report on the suspicious activity. FinCEN determined that the firm failed to implement controls to prevent users from hiding their locations, allowing individuals in sanctioned jurisdictions to access the platform. FinCEN discovered that the firm processed transactions for users in North Korea and Iran, including state-sponsored cybercriminals and designated terrorist organizations.

FinCEN also detailed how the firm’s platform was used to launder proceeds from ransomware attacks, darknet markets, and romance scams targeting the elderly. FinCEN found that the firm facilitated millions of dollars in transfers to unregistered mixing services designed to obscure transaction trails.

FinCEN also found that the firm’s CEO served as the chief compliance officer despite having no relevant training or experience. According to the Order, senior leadership ignored employee concerns about fraud and instructed staff not to file reports on suspicious activity.

FinCEN found the firm violated the Bank Secrecy Act, specifically 31 U.S.C. § 5330 ("Registration of money transmitting businesses") and 31 C.F.R. § 1022.380 ("Registration of money services businesses") regarding registration; 31 U.S.C. § 5318(h)(1) ("Anti-Money Laundering Programs") and 31 C.F.R. § 1022.210 ("Anti-money laundering programs for money services businesses") regarding anti-money laundering programs; and 31 U.S.C. § 5318(g)(1) ("Reporting of Suspicious Transactions") and 31 C.F.R. § 1022.320 ("Reports by money services businesses of suspicious transactions") regarding suspicious activity reporting.

To resolve the matter, the firm agreed to a civil money penalty of $3.5 million, with $1.75 million credited for amounts paid to the Department of Justice. The firm also agreed to cooperate fully with FinCEN in any related investigations.