USA: Who Bears Final Responsibility and Liability

Because cryptocurrency transactions are encrypted and decentralized by nature, virtual currencies continue to provide a convenient method of transferring funds obtained from illegal activities without risk of a central authority discovering the funds’ illicit nature. On the other hand, transactions involving traditional financial actors, such as banks, brokers and dealers, and money service businesses, are subject to U.S. anti-money laundering laws and regulations aimed at detecting and reporting suspicious activity, including money laundering and terrorist financing, as well as predicate offenses like securities fraud and market manipulation. Nevertheless, the recent message from U.S. enforcement agencies is that, going forward, they will be enforcing anti-money-laundering regulations upon virtual currency exchanges, even those operating outside the United States.

Cryptocurrency exchanges, including those operating outside the United States, will need to understand and comply with U.S. anti-money laundering requirements if they seek to have a significant U.S. customer base. Moreover, DOJ’s and FinCEN’s willingness to pursue criminal charges and significant civil fines — $110 million for BTC-e and $12 million for Vinnik, respectively — is a sign that cryptocurrency exchanges and individuals involved in these exchanges should be prepared to face significant fines and possibly even criminal charges if exchanges choose not to comply with U.S. anti-money-laundering requirements, even if the companies are operating outside of the United States.


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