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Fiat, not Crypto and Bitcoin, Predominantly Used in Money Laundering

Crypto, including Bitcoin and Monero, have had some bad rap over the years for their alleged use as vehicles proliferating illegal activities like money laundering– A Big Fat Lie. From the onset–and perhaps because of the misunderstanding of the technology powering Bitcoin and the nature of BTC transactions, bad actors jumped in hoping to move Read More

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How banks can identify money laundering involving crypto, explained

What are the tools that banks and financial institutions need to identify money laundering involving crypto? This explained guide reveals all. How does blockchain analytics software work for financial institutions exposed to crypto? They enable transactions to be monitored on all major blockchains — 24/7 and in real time. The risk associated with incoming and outgoing transactions can be determined — covering high value payments, transfers involving multiple digital assets and/or accounts, as well as transactions that appear to have no logical business explanation. A clearer picture can also be gathered over time by piecing together intelligence from entities making…

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Japan’s FSA asks cryptocurrency industry group to introduce FATF travel rule

Japan has been a member of the FATF since 1990. Japan has made another step toward adopting cryptocurrency Anti-Money Laundering regulations developed by the Financial Action Task Force, Cointelegraph Japan reports. The Japanese Financial Services Agency announced Wednesday that it will adopt the FATF’s travel rule — a set of regulations requiring virtual asset service providers to share transaction data for senders and recipients — by April 2022. “It is required to introduce and implement the travel rule regulations in each country,” the FSA noted. The FSA requested the Japanese Virtual Currency Exchange Association, a local self-regulatory crypto organization, to prepare for the…

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New FATF Guidance Applies Regulatory Standards to Decentralized Exchanges, Defi and NFTs

On March 19, the Financial Action Task Force (FATF) published draft guidance on the risk-based approach to virtual assets. The newly updated guidance now applies anti-money laundering and know-your-customer rules to stablecoins, decentralized finance (defi), and non-fungible token (NFT) assets. FATF Defines Decentralized Exchanges and Defi as a Virtual Asset Service Providers For a while now, cryptocurrency proponents have said that one day, global regulators would likely target decentralized finance (defi) and the latest non-fungible token (NFT) hype. For a while now, the Financial Action Task Force (FATF) has been trying to come up with a regulatory standard for cryptocurrencies…

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FATF Recommends Heightened Restrictions On Virtual Assets And Service Providers

In its updated guidance on virtual assets and virtual asset service providers, the FATF recommends requiring more strict KYC/AML measures. The Financial Action Task Force (FATF) has updated its “Guidance for a risk-based approach to virtual assets and VASPs.” Previous FATF guidance, released in 2015 and updated in 2019, has recommended regulating virtual assets in a similar way to traditional finance, mandating customary KYC/AML laws that affect most financial entities. The new updates would alter this dramatically, encouraging heightened restrictions and surveillance on virtual asset service providers, or VASPs. The latest guidance includes expansion on what constitutes VASPS, and could…

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Law Decoded: The year of the Crypto Futures Trading Commission, Sept. 25–Oct. 2

The end of the U.S. federal government's fiscal year brought a cascade of major announcements from agencies. Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law. Editor's note In a tweet late last night, President Trump said that he and Melania had tested positive for COVID-19. If you weren’t already aware of that, you may want to catch up on a deluge of wishes for life and death, alongside speculation as to Trump’s announcement being a hoax, before sitting down to this week’s Law Decoded. Or possibly not. Every week…

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BitMex denies CFTC and DoJ allegations, says trading will continue

Despite criminal charges from the DOJ and at least one arrest of its leadership, Bitmex promises to continue operating as usual. In a blog post published Thursday afternoon, Bitmex lashed out at charges that the Commodity Futures Trading Commission and Department of Justice filed against the exchange and its management earlier today. Bitmex's statement claimed that "From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance." What exactly "applicable U.S. laws" are will likely be central to the case. Bitmex has long maintained that it…

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FinCEN director warns banks about cryptocurrency risk exposure

FinCEN has warned U.S. banks that it is closely watching how they respond to crypto risk exposure with their AML programs. The U.S. Financial Crimes Enforcement Network (FinCEN) director Kenneth Blanco has warned banks to think seriously about their cryptocurrency risk exposure. During the virtual 2020 ACAMS anti-money laundering Conference in Las Vegas this week, Blanco discussed the obligations of banks in implementing effective anti-money laundering (AML) policies. Current FinCEN regulations (FIN-2019-A003) state that it is the responsibility of all financial institutions to identify and report suspicious activity concerning how criminals and other bad actors exploit card verification checks for…

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Mandatory KYC verification may contradict privacy laws in South Korea

Will this legal contradiction be resolved before the deadline? With the South Korean government preparing to implement know-your-customer (KYC) and anti-money laundering (AML) compliance processes, there is confusion among legal experts as to whether the requirements contradict other laws. According to Digital Today, the new requirements would contravene the existing Personal Information Protection Act, which stipulates that local companies cannot legally request social security numbers. The measure also cover financial institutions, however they can request it under exceptional circumstances, such as for major banking transactions. The Enforcement Decree of the Special Payment Act is expected to come into force in…

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FinCEN leak suggests new AML measures may not go far enough… for banks

The leaked documents show many banks 'enabling' money laundering. Leaked documents from the U.S. Financial Crimes Enforcement Network (FinCEN) imply that the agency’s revamped efforts to identify illicit transactions and money laundering may not be sufficient. But on this occasion, the institutions described as being at fault are not crypto exchanges, but some of the world’s best-known banks. BuzzFeed News reported on Sept. 20 that it received thousands of documents detailing “suspicious activity reports,” or SARs, from banks to FinCEN between 2000 and 2017. According to the news outlet, the reports “offer an unprecedented view of global financial corruption, the…

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Illicit crypto transactions are getting more attention from the government

The IRS has a strong interest in receiving information from informed whistleblowers about offshore crypto accounts and criminal crypto tax activity. The COVID-19 pandemic has forced governments worldwide to focus on bringing blockchain technology to their financial services, along with the needed regulatory upgrades to keep the burgeoning fintech industry clean. Related: Not like before: Digital currencies debut amid COVID-19 For example, on Sep. 10, Switzerland — a global center for the wealth management industry, housing around $2 trillion or 27% of global offshore wealth — passed a reformed Blockchain Act that includes a new set of laws and regulations…

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FinCEN Ready to Roll Out AML Regulations Revamp 

The United States Financial Crimes Enforcement Network (FinCEN) is gearing up to make a sweeping regulatory overhaul, as it seeks to tighten data compliance within the financial sector. Earlier this week, the agency confirmed in a statement that it would be releasing proposals for a new regulatory regime to strengthen rules governing financial institutions’ disclosure requirements. Evolving to Deal With Today’s Threats As the statement explained, FinCEN is working to address money laundering and terrorist financing threats, which have increased in the past few years. To bring a possible stop to these threats, the agency has worked with the Anti-Money-Laundering Effectiveness…

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BRD’s enterprise banking blockchain boosted by new compliance strategy

Crypto wallet provider BRD partners with Ciphertrace, Chainalysis and others to boost its banking enterprise solution. In July this year, the Office of the Comptroller of the Currency granted permission for federally chartered banks to provide custody services for cryptocurrency. While significant, the need for enterprise-grade infrastructure to securely deploy custody solutions has become crucial.  Adrien Treccani, CEO of METACO — a technology partner for institutions entering the digital asset ecosystem — mentioned in a report published by Cointelegraph, PwC and CV VC that the institutional adoption of custody solutions for managing digital assets has clearly entered a new phase:…

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Report: Privacy coins don’t conflict with Anti-Money Laundering laws

Where does the right to financial privacy end? Privacy-oriented cryptocurrencies like Monero (XMR) do not conflict with Anti-Money Laundering laws, according to a major global law firm. Perkins Coie, a Seattle-based international law firm, published a report devoted to the AML regulation of privacy coins on Sept. 15. In the report, Perkins Coie aims to dispel the purported misconception that privacy coins like XMR are fundamentally incompatible with AML compliance, arguing that regulated entities are capable of complying with AML obligations while supporting privacy coins. According to Perkins Coie, privacy coins ultimately present “no incremental challenges or requirements” to Virtual…

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Privacy coins ‘pose less risk of money laundering than other coins’

Privacy coins aren’t a major money laundering risk a new white paper argues. Privacy coins including Monero, Dash, Grin, and Zcash pose less of a risk of money laundering than other cryptocurrencies according to a report by a global law firm. According to a new white paper released by U.S. international law firm Perkins Coie, anti-money laundering (AML) measures taken by regulatory bodies worldwide have been sufficient to address any issues caused by privacy coins, and additional oversight may not be necessary. The paper cited coins fitting within the current financial regulatory structure used by the U.S. Financial Crimes Enforcement…

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Binance sued for allegedly facilitating money laundering with ‘lax KYC’

Binance’s lax KYC requirements are creating more legal problems for the exchange. Binance’s famously light Know Your Customer requirements are being targeted by the current owners of Zaif, a Japanese cryptocurrency exchange that got hacked in 2018. Plaintiffs are claiming that its weak KYC requirements and high daily withdrawal limit facilitated the laundering of $60 million stolen from the exchange. The lawsuit was filed in the Northern District of California by representatives of Fisco cryptocurrency exchange, which acquired Zaif soon after the hack. Fisco is accusing Binance of helping launder $9 million in cryptocurrency, and is seeking compensation for these…

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How banks are integrating crypto AML software for compliance

Virtual asset service providers (VASPs) are looking for effective cryptocurrency compliance solutions as new regulations are introduced globally to combat illicit activity on the blockchain. What solutions are available to them? With the exposure of traditional banks and financial institutions to crypto-assets and all the risks involved, as well as the continued advice from governmental authorities to banks to integrate a crypto risk management system, what are the solutions available? In order to align with current regulatory standards, banks and financial institutions entering the digital asset space, whether as direct or indirect service providers, must comply with Anti-Money Laundering and…

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FATF hints at Binance as example of an exchange avoiding regulation

The FATF doesn’t seem to like frequent jurisdiction hoppers, notably Binance. A new report by the Financial Action Task Force, or FATF, details a series of red flags that can help identify illicit activity involving cryptocurrencies. Among them are a general set of guidelines involving exchanges in jurisdictions with weaker regulations, where Binance is seemingly singled out for often moving to avoid stronger regulatory oversight. The report, published on Sept. 14, lists a variety of red flags for spotting money laundering or terrorism financing, grouped by categories. Most red flags cited are commonly seen in traditional finance as well: young…

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AnChain.AI and Bluehelix partner for compliance solutions

The platform hopes to help in meeting AML standards. Blockchain company AnChain.AI and decentralized finance and technology provider Bluehelix plan to launch solutions addressing compliance within blockchain networks. According to reports, the two companies will roll out its Blockchain Ecosystem Intelligence, or BEI, risk engine solution. BEI is based on an API and will offer comprehensive real-time, preventive blockchain intelligence. AnChain.AI said BEI looks over 100 million crypto address and smart contracts and sifts through this using a machine learning model. It will find the best compliance structure to meet anti-money laundering (AML) when determining the source and destination of…

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