The Financial Crimes Enforcement Network today issued a proposed rule that would identify international convertible virtual currency mixing as a “class of transactions” of primary money laundering concern. CVC mixing involves facilitating virtual currency transactions in a manner that obfuscates the source, destination or amount involved in the transactions, according to the agency. The proposed rule would mark the agency’s first use of its authority under the Patriot Act’s Section 311 to target a class of transactions, FinCEN Director Andrea Gacki said.
The lack of transparency surrounding international CVC mixing is an acute money laundering and national security risk, with Hamas, the Palestinian Islamic Jihad and North Korea among the illicit actors that have engaged in the activity, according to FinCEN. The proposed rule would require covered financial institutions, including banks, to report information about transactions that they know, suspect or have reason to suspect involves CVC mixing.
“CVC mixing offers a critical service that allows players in the ransomware ecosystem, rogue state actors, and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains, Gacki said.