FinCEN's lead prosecutor of Ripple's BSA violation on digital currency

[Guest]

https://bol.bna.com/hogan-lovells-partner-on-digital-currency/

Quote

Big Law Business: As a former lead attorney at the agency, Can you tell us about enforcement trends at FinCEN?

Lisa: If you look over the last five years in FinCEN, there’s been a lot more attention and emphasis to non-compliance. In 2012, they had two enforcement actions. In 2013, they had another two. In 2014, they had eight, and in 2015, they had 12. I do not think it is just with traditional financial institutions, like banks and money transmitters — MoneyGram and Western Union. But it has also been in some areas where there has not been a lot of attention in the past — things like digital currencies and casinos.

I think there is much more concern by the government about terror financing and transnational organized crime.

Also, in 2013, FinCEN created a new enforcement division as part of an agency reorganization. The Office of Compliance and Enforcement has since brought some cases that have had an impact. In May 2015, I was the lead prosecutor that brought the first civil enforcement action against a virtual currency space, Ripple Labs. It was a parallel civil-criminal enforcement action with the U.S. Attorney’s Office for the Northern District of California. Ripple Labs operated a virtual currency exchange and did so without having proper anti-money laundering controls in place.

+ more about law/regulations around digital currencies

[thinlyspread]

7 minutes ago, tomxcs said:

Ripple Labs operated a virtual currency exchange and did so without having proper anti-money laundering controls in place.

So it was over the exchange itself? Or that they themselves provided entry to it? I thought the latter, which was why they asked for KYC at the entry point (wallet) into the protocol. But then will Stellar face the same issues as a US company, since they also have an exchange, albeit one nobody uses and that there are no fiat exchanges for (that I know of).

[Mercury]

So it was over the exchange itself? Or that they themselves provided entry to it? I thought the latter, which was why they asked for KYC at the entry point (wallet) into the protocol. But then will Stellar face the same issues as a US company, since they also have an exchange, albeit one nobody uses and that there are no fiat exchanges for (that I know of).

If an example is to be made it is best to go for one in your jurisdiction with actual users. . . The dual investigation and small but strong user base, and potentially ironically having a company history of compliance (they will work with and not contest investigators) makes a nice target if a regulator is looking to establish a precedent

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