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FinCEN plans CTRs for crypto-transactions

Chris Hamblin, Editor, London, 24 December 2020

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The US Treasury's Financial Crimes Enforcement Network is proposing to require banks to send it reports, keep records and verify the identities of customers in relation to transactions involving convertible virtual currencies or digital assets that are legal tender that are held in 'unhosted wallets' or wallets hosted in jurisdictions that FinCEN does not like.

The rule is also to apply to money service businesses or MSBs, a US term that takes in cheque cashers, money transmitters and bureaux de change.

The aim is to require banks to identify and verify "hosted wallet customers" who engage in transactions with "unhosted or otherwise covered wallet counterparties" when those customers conduct transactions above the equivalent of US$3,000 in convertible virtual currencies or digital assets that are legal tender with unhosted or otherwise covered wallet counterparties (with reporting required for transactions over US$10,000 - the longstanding currency transaction reporting or CTR limit set in 1970 when the Bank Secrecy Act was enacted). Banks ought also to collect the names and physical addresses of these counterparties.

FinCEN also wants to create a new prohibition against structuring (engaging in transactions in a bid to "go under the radar" and forestall the generation of CTRs) that applies to virtual currency transactions.

FinCEN is proposing to impose these requirements on banks in accordance with the Bank Secrecy Act, making them anti-money-laundering measures. It has issued a notice of proposed rulemaking which expresses its desire to change 31 CFR Parts 1010, 1020 and 1022. Comments must be in by 4 January.

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