On October 19, 2023, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rulemaking (NPRM) that would implement new recordkeeping and reporting requirements on domestic financial institutions and domestic financial agencies, related to transactions that they know, suspect, or have reason to suspect involve convertible virtual currency (CVC) mixing within or involving a non-U.S. jurisdiction.
FinCEN issued the NPRM pursuant to Section 311 of the USA PATRIOT Act, which provides the Secretary of the Treasury (the “Secretary”) the authority to require domestic financial institutions and domestic financial agencies to take “special measures” where the Secretary finds reasonable grounds to conclude that a class of transactions, institution, account, or foreign jurisdiction is of “primary money laundering concern.” The NPRM identifies international CVC mixing as a class of transactions of primary money laundering concern, highlighting the use of CVC mixing services by illicit actors including cyber criminals and terrorist groups. According to FinCEN’s press release, the NPRM represents FinCEN’s first use of Section 311 to target a class of transactions.
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