As set forth in an article I co-authored, which was published this month in The Banking Law Journal, the Supreme Court’s recent decision in Kisor v. Wilkie could undermine the ability of federal agencies to bring enforcement actions based on violations of the Bank Secrecy Act (“BSA”). In particular, it may undermine the ability of these agencies to rely on the interagency examination manual published by the Federal Financial Institutions Examination Council (the “FFIEC Manual”) to define the requirements of the Bank Secrecy Act. This change in the law would impact not only banks and traditional financial institutions, but all entities subject to the BSA, including many businesses that transmit cryptocurrencies and other FinTech companies that transmit funds in the U.S.
Money services businesses in the U.S. are required to have anti-money laundering programs that comply with the BSA. However, the requirements of the BSA are expressed at a high level of generality and often are ambiguous as applied to specific business activities. For this reason, when the U.S. government brings an enforcement action against a business for violating the BSA, it often relies on the FFIEC Manual to define the requirements of the BSA that the business violated.
Earlier this year, FinCEN published a lengthy Guidance, asserting that the BSA applies to a variety of businesses that transmit cryptocurrency tokens. This has led to concern that FinCEN may ramp up the filing of enforcement actions against cryptocurrency and blockchain businesses for failing to comply with the BSA. Given the novelty of the anti-money laundering issues faced by many FinTech companies, the BSA requirements are particularly likely to be ambiguous with respect to the activities of these businesses.
While FinTech companies often are less familiar with the requirements of the FFIEC Manual than traditional banks, FinCEN and other government agencies are likely to rely on the FFIEC Manual to inform their view of what FinTech money services businesses must do to comply with the BSA. For this reason, any FinTech company being investigated for potential violations of the BSA should be aware of the Supreme Court’s recent decisions suggesting that courts need not defer to regulatory publications like the FFIEC manual.
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