First FinCEN Enforcement Action Against Digital Currency Company
On Tuesday, the Financial Crimes Enforcement Network (FinCEN), the federal government’s anti-money laundering watchdog, announced the first civil enforcement action against a digital currency company, Ripple Labs, Inc. and its affiliate XRP II LLC (Ripple). Simultaneously, the United States Attorney for the Northern District of California Department of Justice (DOJ) announced a settlement agreement against Ripple to resolve potential criminal charges, ensure cooperation in other investigations and provide for substantial remedial compliance measures.
Ripple was assessed a $700,000 civil money penalty by FinCEN and forfeited $450,000 to the DOJ, which was used to partially satisfy the FinCEN penalty.
In a FinCEN press release, the action against Ripple Labs and its subsidiary XRP II was for "willful violations" of the Bank Secrecy Act (BSA), having failed to implement appropriate anti-money laundering (AML) procedures and report suspicious transactions.
Further, FinCEN Director Jennifer Shasky Cavalry indicated in a May 6thkeynote speech at the West Coast AML Forum, that the agency is working closely with BSA examiners at the IRS in its investigations, which may result in future enforcement actions.
It is also important to note that FinCEN is holding companies responsible for AML/BSA compliance from the moment they start operating.
This action is a key learning lesson for companies about the importance of anti-money laundering compliance at the front end of their business operations. The digital currency industry is working hard to comply with the BSA and related regulations and will continue to do so while endeavoring to bring innovation to the financial services sector. Gaining regulatory clarity is an important part of the development and growth of this industry. The industry is fully invested in getting this right.
Recognizing the challenges digital currency companies face, the Chamber of Digital Commerce provides leadership on regulatory matters, and is the sponsor of the first and only accredited AML compliance course specifically designed for the digital currency industry. The Chamber will continue to take a leadership role by advancing the public-private sector dialogue, offering educational webinars and training sessions, and serving as a clearinghouse for information sharing within the industry.
As the premier trade association for the digital currency community, the Chamber of Digital Commerce provides policy makers with educational resources, engagement on key issues and a platform to help shape a pro-growth regulatory environment.
Update: California's Virtual Currency Bill (AB-1326)
California's assembly committee on banking and finance last week approved AB-1326, a bill that would prohibit any person or business from engaging in virtual currency business activities without a money transmission license or exemption from the state Department of California's Division on Business Oversight. Since its introduction in February by Banking and Finance Chairman Matt Dababneh (D-San Fernando Valley), the bill has been referred to the committee on banking and finance twice and amended. After being approved by the policy committee on April 28th with an 8-2 vote, the bill will now be considered by the appropriations committee. If approved, the bill would then need to pass a vote of the full Assembly and state senate before being sent to the Governor's desk for signature and enactment.
This issue will be discussed during our next Government Affairs and Public Policy (GAPP) Committee meeting on May 19 at 12:00 PM/PT 3:00 PM/ET. Please RSVP to receive dial-in information.
Click to view the bill and track its developments.
The Chamber is making a difference and you can help!
The Government Affairs and Public Policy Committee (GAPP) oversees and implements the Chamber’s policy initiatives. Chamber members are encouraged to participate. Your support and input is instrumental to strengthening the community's engagement on those issues that impact your business every day. For more information or to join, email us.
Inside Bitcoins NYC
The Chamber of Digital Commerce exhibited and attended Inside Bitcoins' New York conference on April 27-29. Offering a keynote address on Wednesday morning, Chamber President Perianne Boring spoke of the impacts Washington is having on the digital asset industry.
Chamber Hosts Third AML Compliance Bootcamp In NYC
Following on its similar courses held earlier this year in Miami and San Francisco, the Chamber hosted its third anti-money laundering (AML) compliance bootcamp for digital currency companies and their banking partners in New York City April 30 - May 2.
For even the most established companies, navigating the many hurdles of compliance with federal AML, KYC, and OFAC regulations, as well as the regulatory regimes developing at the state level, can be a daunting task. For small companies with tight resources and little knowledge of these regulations, it can be downright overwhelming. These AML Compliance bootcamps are a key part of the Chamber's initiative aimed at educating those in the digital currency community, as well as regulators and financial institutions. More from Bitcoin Magazine...
Government Affairs and Public Policy Committee Call:
May 19, 2015: 12:00 PM/PT 3:00 PM/ET
Topics of discussion: (1) Recent FinCEN Enforcement Action (2) Updates on current federal and state activity
The MIT Media Lab recently named Brian Forde as the director of their digital currency initiative. Forde is a former White House advisor on mobile and data innovation. The MIT digital currency initiative’s goal is to conduct and “provide evidence-based research to support existing and future policy and standards.”
Several senators have announced the formation of a bipartisan electronic payments caucus to educate their staff and other senators on data security and trends in the industry. The Senate Payments Innovation Caucus will consist of Senators Mike Rounds (R-SD), Gary Peters (D-Mich), Johnny Isakson (R-Ga) and Tom Carper (D-Del). The announcement comes after several members of the House formed a bipartisan Congressional Payments Technology Caucus last month.
itBit, bitcoin exchange with operations in the U.S. and Singapore, received the first digital currency license under New York Banking Law from the New York Department of Financial Services (NYDFS). With this license, itBit avoids the need for a BitLicense, for which final details are expected this month. itBit also announced the closing of a $25 million series A funding round, as well as, 3 new board members, Sheila Bair (former FDIC chairman), Senator Bill Bradley (former U.S. Senate), and Robert Herz (former Financial Account Standards Board FASB chairman).
Circle Closes $50 Million Investment Round Consumer Internet company and bitcoin wallet provider, Circle closed a $50 million investment round co-led by Goldman Sachs and China-based IDG Capital Partners. In addition to the investments, the firm will also help Circle enter the Chinese market. The company also announced new dollar features would be rolling out to allow customers to hold, send and receive dollars.
Former Morgan Stanley investment manager Jacob Dienelt has joined blockchain technology company Factom as its treasurer. Dienelt is not new to bitcoin; during his tenure at Morgan Stanley he co-founded the bitcoin paper wallet company Lazzerbee. Dienelt is one of several Wall Street bankers to be poached by Bitcoin startups this year.
Overstock Seeks to Issue $500 M in Bitcoin-Like Stocks
Online retailer Overstock, filed a first offering document with the Securities and Exchange Commission (SEC) to issue up to $500 million in stock or other securities on a platform that uses blockchain technology. Overstock’s digital securities would be available to trade on an Alternative Trading System (ATS) registered with the SEC.
The Red Cross Is Taking Bitcoin Donations To Help Nepal
As the death toll surpasses 7,500 from the 7.8M earthquake that hit Nepal late last month, the Red Cross continues to provide medical and other essential supplies to those in need. Thanks to ChangeTip, the Red Cross is now accepting bitcoin donations via Twitter.
ChangeTip is encouraging the digital currency community to make contributions (large or small) to raise awareness of the disaster, assist with relief efforts and help further build out the micropayments and charitable giving use case for bitcoin. Click here to donate over Twitter now.
Proof of Workout Challenge
The Proof of Workout Challenge is a social media campaign using health and fitness to engage mainstream consumers with the bitcoin community. Participants will learn about the potential social benefits of bitcoin.
Registration is open this week and the challenge begins on May 11th. Participants are prompted to choose a 30-day fitness goal and share progress posts, healthy habits, fitness app screenshots after a workout, etc, using the tags #ProofOfWorkout / @ProofOfWorkout.
The users with the most engagement will be rewarded a $100 Nike Gyft card - as well as a healthy new lifestyle. Use ChangeTip to encourage your friends and get involved.
Sponsored by: Chamber of Digital Commerce, BitPay, ChangeTip, and Bitcoin Magazine