Virtual currency is becoming more and more prevalent and while you may not have had any direct experience with it yet, we are confident you eventually will. Not sure what virtual currency is and want to know more? Check our January 2015 Newsletter article entitled, “What is Bitcoin? And, Why Banks Should Care”.
Awhile back, FinCEN issued ruling FIN-2014-R012 that addressed whether a company setting up a convertible virtual currency payment system would be a money transmitter under the Bank Secrecy Act. The payment system in question would provide virtual currency-based payments to merchants (hotel industry) in the United States and Latin America, who wish to receive payment for goods or services sold in a currency other than that of legal tender in their respective jurisdictions. The virtual currency company would receive payment from the buyer (consumer) in “real currency” and then transfer an equivalent amount of Bitcoin to the seller (merchant), minus a transaction fee.
FinCEN’s March 18, 2013, Guidance on Virtual Currencies refers to participants in virtual currency arrangements, as “exchangers,” “administrators,” and “users”. It also states that both exchangers and administrators are considered to be money transmitters, unless a limitation or exemption applies. Therefore, FinCEN has concluded that the virtual currency company referenced in the above scenario would be a money transmitter because it is acting as an exchanger of convertible virtual currency.
As a money transmitter, the virtual currency company must register with FinCEN, conduct a comprehensive risk assessment of its exposure to money laundering, implement an Anti-Money Laundering Program based their risk assessment and comply with the recordkeeping, reporting and transaction monitoring obligations prescribed by the Bank Secrecy Act.
Now might be a good time to double check if you have any customers acting as an exchanger (a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency) or acting as an administrator (a person engaged as a business in issuing and redeeming a virtual currency)? If you do, that customer is an MSB.
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!