Topic: FinCEN addresses Bitcoin - page 5. (Read 28355 times)

Excerpt from prepared remarks of

Jennifer Shasky Calvery,
Director,
Financial Crimes Enforcement Network

She gave the keynote in Miami this morning for today's session of the MoneyLaundering.com's 18th annual AML conference.

Apparently anyone selling any type of virtual currency on ebay or craiglist is now a money transmitter, and as such a MSB, and as such now in violation of FinCEN interpretation if they haven't registered as an MSB.

There has to be some lawyer out there who is interested in Bitcoins and who can offer their interpretation on this matter.

To date, FinCEN’s analysts have explored and produced reference products for law enforcement on many traditional and emerging payment systems. These include: cross border funds transfers and correspondent accounts, money transmitters, online payment systems, prepaid cards, and mobile payments. FinCEN’s analysts then follow up this work by providing in-person analysis and training to thousands of investigators each year.

In addition to developing products to help law enforcement follow the financial trails of emerging payments methods, FinCEN also develops guidance for the financial industry to clarify their regulatory responsibilities as they relate to emerging areas.

In fact, just yesterday, FinCEN issued interpretive guidance to clarify the applicability of BSA regulations to virtual currencies. The guidance responds to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of persons who use virtual currencies or make a business of exchanging, accepting, and transmitting them.

FinCEN’s rules define certain businesses or individuals as money services businesses (MSBs) depending on the nature of their financial activities. MSBs have registration requirements and a range of anti-money laundering, recordkeeping, and reporting responsibilities under FinCEN’s regulations. The guidance considers the use of virtual currencies from the perspective of several categories within FinCEN’s definition of MSBs.

The guidance explains how FinCEN’s “money transmitter” definition applies to certain exchangers and system administrators of virtual currencies depending on the facts and circumstances of that activity. Those who use virtual currencies exclusively for common personal transactions like receiving payments for services or buying goods online are not affected by this guidance. Those who are intermediaries in the transfer of virtual currencies from one person to another person, or to another location, are money transmitters that must register with FinCEN as MSBs unless an exception applies. Some virtual currency exchangers are already registered with FinCEN as MSBs, though not necessarily as money transmitters. The guidance clarifies definitions and expectations to ensure that businesses engaged in similar activities are aware of their regulatory responsibilities.

It's not too late to buy back in.......

I was just looking at some of the fines for failure to register

IV. CIVIL MONEY PENALTY
FinCEN may impose civil money penalties against a money transmitter, or any person who
owns or controls a money transmitter, for violations of money services business registration
requirements.14 FinCEN may assess a civil money penalty for failure to register as a money
transmitter, in an amount up to $5,000 per violation. Each day a violation continues constitutes a
separate violation. FinCEN may assess civil money penalties against a money transmitter, or any
partner, director, officer, or employee thereof, for each willful violation of anti-money laundering
program requirements. A penalty of $25,000 per day may be assessed for failure to establish and
implement an adequate written anti-money laundering program.
15 A separate violation occurs for
each day the violation continues.

This is bad, bad news.

First they got your attention, then they regulate, then they take over.

Then they kill it.

I think the real freedom is going to be found on the BTC-e exchange with the Russians and the Chinese. At least you know you can't trust them!
With the US making noises, the EU will copy them, and before you know it, bitcoin will be rebuilt, minus the bits that made it a threat to governments.

Oh well, lets just ride this sucker until it runs out of steam!

This part ("are then") is not quite correct.

The state and federal laws are disconnected, even if they are intentionally similar in many cases.  Becoming an MSB or MT at the federal level does not immediately trigger a state requirement.  A state requirement to -- for example -- undergo a background check or provide a surety bond is not triggered by becoming an MSB.  The state requirement is triggered by... your transmitting money in a regulated fashion.

A couple US states do not require money transmitter/MSB-like licenses, leaving only the federal requirements to handle.

I wonder if they could nail every company that sells gift cards? They are virtual currency.

What about Microsoft xbox points? that's a virtual currency?

Every game online store? Blizzard, EA, all screwed.

This is a huge can of worms.

All MSBs have to register and are then subject to expensive fees and regulatory practices by their states.

Jesus, you people really don't pay attention to anything at all.

A "money services business" is someone who holds (fiat) money for someone else.

A "money transmitter" is someone who holds (fiat) money for someone else and carries it across jurisdictional boundaries.

"Money" is guaranteed future value.

None of this has anything to do with Bitcoin, although they would like you to believe it does.  It's a hoax.  It's a psy-op.  All they are doing is telling you how they will respond if you try to peg your "virtual currency" to the US dollar.  And they are telling you this because they have to give you notice in order to limit their own liability for any assumptions made regarding their defective ponzi money.  They are limiting their own liability for their practice of transmitting the use of force via scrip, in arbitrarily regulating its value by money-printing and confiscation.

Bitcoin is not pegged to anything.  It does not have "equivalent value" in "real" US dollar currency.  It is not a "substitute" for "real" US dollar currency.  It is not given arbitrary value by anyone and thus is not based on the transmission of force.  It is not "convertible" for anything.  It isn't even "money" technically.

This is 100% nonsense that only applies to perhaps a couple of businesses in the Bitcoin community that peg their vouchers to the US dollar.

If you idiots respond to this in the way in which it was designed for you to respond, and stop mining and increase the centralization of Bitcoin and voluntarily sign up for regulations that don't actually apply to you, then you might as well just flush your Bitcoins down the toilet.

Bitcoin is not pegged to anything.  It does not have "equivalent value" in "real" US dollar currency.  It is not a "substitute" for "real" US dollar currency.  It is not given arbitrary value by anyone and thus is not based on the transmission of force.  It is not "convertible" for anything.  It isn't even "money" technically.

Fincen called me back. ... He had no idea

If you get someone knowledgeable on the phone

(ff) Money services business. A person wherever located doing business , whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.

(1) Dealer in foreign exchange. ...

(2) Check casher ...

(3) Issuer or seller of traveler's checks or money orders. ...

(4) Provider of prepaid access ...

(5) Money transmitter ...

(6) U.S. Postal Service. ...

(7) Seller of prepaid access. ...

Fincen called me back.  I asked about the definition of "Money Transmitter" and whether the definition applied to one-time or rare transactions by businesses or individuals trigger.  He said that doing even one transaction by an individual requires them to register as  "Money Transmitter"  (I had not seen the rules that requires transmitters to register, only MSB's.)  He then started to talk about travelers checks and check cashing services.

I explained I was writing an article about the new clarifications and how it relates to Bitcoin.  I explained that all kinds of questions arose about who is a Money Transmitter or Money Services Business and what rules they had to follow.  I also asked the Bitcoin mining question. 

He had no idea what Bitcoin was and he said he had to research it and call me back.