- with Finance and Tax Executives
U.S. Treasury Department Undersecretary for Terrorism and Financial Intelligence Sigal Mandelker described money laundering and financing of terrorism risks in distributed ledger technologies.
In a speech delivered at a cryptocurrency and blockchain conference, Ms. Mandelker warned that the virtual currency industry is being exploited by:
- countries, entities and individuals evading U.S. sanctions;
- hackers stealing from virtual currency exchanges, resulting in an estimated $1.5 billion in stolen funds over the past two years; and
- terrorist organizations raising funds using bitcoin.
Ms. Mandelker reminded virtual currency firms that compliance with AML and counterterrorism financing and sanctions regimes is a mandatory legal requirement and important to national security. To combat bad actors, she advised firms whose activities include transmitting physical or convertible virtual currency to ensure they are compliant with Bank Secrecy Act obligations. Specifically, Ms. Mandelker reminded money transmitters to:
- register with the Financial Crimes Enforcement Network ("FinCEN") as a money services business;
- establish and maintain an AML program to mitigate the risk of money laundering and terrorist financing; and
- enact recordkeeping and reporting standards that include filing Suspicious Activity Reports and Currency Transaction Reports.
Ms. Mandelker also outlined common traits of successful sanctions compliance programs, which include:
- developing a risk-based program that responds to risks in the entity's particular business;
- conducting due diligence (i.e., know your customer) before beginning services;
- ensuring that any business activity does not include prohibited transactions with designated individuals or entities; and
- setting clear expectations with customers about the types of transactions and activities that are authorized.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
