FinCEN Fines Virtual Currency Company for Violations of Bank Secrecy Act

The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has fined a virtual currency startup $700,000 for failing to register with FinCEN and violations of the Bank Secrecy Act.

Ripple Labs created a virtual currency called XRP, and has raised more than $34 million from investors. XRP, Bitcoin and other virtual currencies have drawn federal regulatory scrutiny because cyber criminals often use them to hide transactions from law enforcement.

The U.S. Treasury has said that virtual currencies are subject to the same regulations as traditional currency. “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws,” said FinCEN Director Jennifer Shasky Calvery. “Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”

The penalty against Ripple Labs is the first of its kind against a virtual currency provider. The $700,000 fine is the result of a settlement between FinCEN and Ripple Labs for violations of Bank Secrecy Act regulations and failure to register a money service business with FinCEN.

In addition, FinCEN said that Ripple Labs is being fined for failing to implement and maintain an anti-money laundering program. Ripple Labs said it is cooperating with FinCEN to strengthen their compliance programs.

The Cogdell Law Firm is a boutique law firm focusing on large, complex business and criminal financial-related litigation, including white collar criminal defense, securities fraud, health care fraud investigation, criminal appeals and state criminal defense. When results matter most, contact Dan Cogdell at (713) 426-2244 or info@cogdell-law.com.

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