Those working in the digital asset space were reminded last month about their anti-money laundering obligations by the CFTC, FinCEN and the SEC.
Leaders of the U.S. Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the U.S. Securities and Exchange Commission issued a joint statement on October 11. The statement reminded those engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act.
The statement brings further clarity to the application of BSA requirements. Regardless of how an asset is labelled, the general categorization is determined by the underlying circumstances. These include the economic reality and use of the asset, activity or service. The same goes for the specific regulatory treatment of the activity involving the asset, and whether the persons involved are “financial institutions” for purposes of compliance under the Act – also known as the BSA.
Firms should pay special attention to the closing comments made by the CFTC, FinCEN, and SEC – that each of them support the application of BSA requirements irrespective of such designations or classifications.
AML requirements under the BSA aren’t, therefore, limited to activities in which digital assets are captured by existing regulations and will also apply to activities not subject to regulation under federal law.
How we can help
Bovill’s Financial Crime Advisory team has a wealth of experience helping firms in understanding and complying with their obligations under global anti-money laundering/counter-terrorist financing regimes. Our work ranges from bespoke reviews of firms’ policies/procedures and/or processes for managing money laundering risk, to full reviews of firms’ AML control frameworks.
Bovill’s Markets team likewise works with a broad range of market participants, including established players and start-ups crossing traditional and digital asset classes, to support initial registration, supplemental designations, and implementation of compliance frameworks in response to changes in trading activities.
As you begin to assess your firm’s regulatory exposure in the US, our specialists would be happy to validate your strategy and solutions. Get in touch today to talk through your plans.