FinCEN Resolves First Enforcement Action Against Virtual Currency Exchange

Anti-Money Laundering FinCEN Bank Secrecy Act Enforcement

On May 5, a virtual currency company and its subsidiary agreed to pay a $700,000 civil money penalty for violating multiple provisions of the Bank Secrecy Act (BSA), in which both companies acted as a money service business and seller of virtual currency without properly registering with FinCEN, as well as, failed to implement and maintain an adequate anti-money laundering (AML) program. Furthermore, according to a Statement of Facts and Violations, FinCEN also charged the subsidiary for not filing or untimely filing suspicious activity reports related to several financial transactions. In addition to the civil money penalty, terms of the agreement require both companies to, among other things, (i) engage in remedial steps to ensure future compliance with AML statutory obligations; and (ii) enhance their current internal measures for compliance with the BSA. In a separate DOJ announcement, both companies entered into a settlement agreement to resolve potential criminal charges with the U.S. Attorney’s Office in the Northern District of California. Under terms of the DOJ settlement, both companies agreed to forfeit a total of $450,000, which will be credited to satisfy FinCEN’s $700,000 penalty, in exchange for the government not criminally prosecuting the companies for the aforementioned conduct.