The Financial Crimes Enforcement Network yesterday assessed a $3.5 million civil penalty against the former cryptocurrency services provider Paxful for Bank Secrecy Act violations and issued a reminder for financial institutions of their anti-money laundering obligations when dealing with virtual currencies.
According to a FinCEN statement, Paxful acknowledged that it willfully violated the BSA by failing to register with the agency as a money services provider and by failing to develop an AML program and file suspicious activity reports. FinCEN said the company enabled transactions with high-risk jurisdictions such as Iran and North Korea. Paxful ceased operations in November.
FinCEN also released a statement reminding institutions dealing in virtual currencies and prepaid access of their BSA obligation to identify and report suspicious activity. “Financial institutions should consider the coverage of these products within their procedures to monitor for potentially suspicious activity, including the extent to which these procedures support the volume of relevant activity.”
