FBI Warns Americans Against Unlicensed Crypto Money Transmitters

FBI Warns Americans Against Unlicensed Crypto Money Transmitters

With the growing popularity of crypto assets, the regulator has expressed concerns about the surge in financial crime. On Friday, the Federal Bureau of Investigation (FBI) warned investors to shun unregistered crypto money transmitters.

The FBI report highlighted the risk associated with the unauthorized money transmitter. Citing the rise of crypto-related crimes, the FBI advised the investors to use the licensed money transmitters while running their day-to-day activities.

Rise of Crypto Crime

According to the report, American investors were urged to conduct due diligence to assess whether the money transmitters comply with the existing anti-money laundering regulation (AML) and meet know your customers (KYC) standards.

The FBI confirmed that it would take law enforcement action against non-compliant crypto firms. This implies that money transmitters operating without a license expose customers to financial losses.

In the proposed law enforcement action, the FBI plans to confiscate funds obtained from unlawful activities. Also, during the proposed investigation, the regulators might force some of the unlicensed firms to halt deposit or withdrawal services temporarily.

The law enforcers advised the investors to choose firms that are registered as money service businesses (MSBs) and operate in accordance with federal law. To identify the unlicensed money transmitter, the FBI encouraged the investors to follow the guidelines issued by the regulators.

The FBI restated that investors should always avoid platforms that do not gather KYC details from the customers. The regulators noted that most of the online application on either Google or Apple marketplace fails to meet the federal compliance requirements. The FBI advised the public to avoid platforms that lack adequate KYC measures.

Law Enforcers Take Action Against Unregistered Money Transmitters

According to the report, the KYC standards are defined as mandatory procedures that require customers to verify their personal information, including name and address, among others.

In the report, the FBI advised the customers to examine the compliance level of the money transmitter on the US Financial Crimes and Enforcement Network (FinCEN). This tool plays a crucial role in assessing whether the crypto firm complies with the existing rules.

Commenting on the FBI warning, the digital asset partner at Piper Alderman, Michael Balcina, noted that the new directives warn Americans from using the crypto mixers. In his statement, the official pointed out that the FBI warning lacked “finer details.”

Balcina observed that the FBI warning aims at informing the investors of the danger associated with privacy tools centered on smart contracts such as Samouri or Tornado Cash.

Need for Comprehensive Regulations for Digital Assets

The executive stated that the FBI warning lacks fine details on how decentralized platforms operate. Balcina urged the regulators to consider developing fit-for-purpose regulations for crypto assets that are clear to comprehend and will bring positive outcomes to both the government and consumers.

The executive expressed concerns about the risk associated with the proposed enforcement action by a federal agency. The warning came days after the US regulators arrested the co-founder of Samourai Wallet for money laundering.

A review of the court filing demonstrated that the chief executive of Samourai Wallet, Keonne Rodrique, and the chief technology officer, William Hill, were accused of severe violation of federal law.

The two were accused of operating unauthorized money transmitters and engaging in money laundering activities. The prosecutors claimed that Rodrique and Hill might receive 25 years imprisonment for breaching the law.

On X, the co-founder of Bankless, Ryan Sean Adams, describes the FBI warning as eerie. The executive responded to the multiple commenters who demanded to know which businesses are grouped as MSB.

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