Recent actions by the Financial Crimes Enforcement Network indicate that regulatory pressure on virtual currency companies is heating up. Yesterday, FinCEN fined Ripple Labs and a subsidiary $700,000 for acting as a money services business but failing to implement and maintain an adequate anti-money laundering program — the agency’s first action against a virtual currency business.
Ripple Labs runs a network that distributes a math-based virtual currency called XRP. According to FinCEN guidance, the Bank Secrecy Act requires certain virtual currency businesses to register as MSBs. FinCEN Director Jennifer Shasky Calvery discussed the penalty at an AML event in San Francisco today, noting that “innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
She also announced that FinCEN recently began a series of supervisory examinations of virtual currency firms, which “will help FinCEN determine whether virtual currency exchangers and administrators are meeting their compliance obligations under the applicable rules.” Read more about the enforcement action.