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FBI Warns Against Using Unregistered Cryptocurrency Transmitters

The Federal Bureau of Investigation (FBI) has issued a warning to Americans advising against the use of Bitcoin remittance services that are not registered as Money Services Businesses (MSBs) under federal law.

The government advises caution to avoid inadvertently utilizing non-compliant services, which could become targets of legal action, potentially affecting users’ financial status.

Adherence to Anti-Money Laundering Regulations

The FBI’s warning underscores the importance of complying with anti-money laundering (AML) regulations outlined in 31 USC § 5330 and 31 CFR §§ 1010 and 1022.

These laws mandate that cryptocurrency remittance services register as MSBs and adhere to specific requirements, such as collecting “Know Your Customer” (KYC) information from clients.

The agency emphasizes that the mere presence of cryptocurrency services in app stores does not guarantee their legality or compliance with federal requirements.

The FBI recommends that individuals visit the Financial Crimes Enforcement Network (FinCEN) website of the U.S. Treasury Department to verify a company’s registration status. Both Coinbase and Kraken (operating under the name Payward Financial Inc.) are listed as registered MSBs on this site.

Risks of Using Non-Compliant Services

The FBI’s statement highlights the potential consequences of using unregistered cryptocurrency remittance services.

Recent enforcement actions against non-compliant entities have caused financial turmoil for users, especially if their cryptocurrency was mixed with funds obtained through illegal means.

Individuals using services that fail to fulfill legal obligations may lose access to their funds following enforcement actions against these entities.

The agency advises caution when using cryptocurrency platforms known to be exploited by criminals for money laundering activities and to avoid publicly promoting services used for illegal purposes.

Crackdown on Cryptocurrency Mixers

The U.S. government has been intensifying its crackdown on cryptocurrency mixers, which are used to obscure the trail of illicit funds, and the FBI has issued warnings about this.

The Office of Foreign Assets Control (OFAC) of the U.S. Treasury Department has imposed sanctions on the Blender.io mixer in response to incidents similar to the 2022 Axie Infinity attack. Additionally, addresses associated with Dragonchain’s volume wind cash have been added to the Specially Designated Nationals list.

The CEO and founder of the Samourai Wallet were recently arrested by the U.S. Department of Justice (DOJ), making headlines. This Bitcoin wallet, known for its emphasis on privacy, has been accused of laundering over 100 million dollars.

The DOJ, in collaboration with law enforcement agencies in Portugal and Iceland, arrested one of the creators of the Samourai Wallet and seized the company’s network servers, domain names, and mobile applications.

Conclusion

The FBI’s alert serves as a reminder of the need to comply with regulations and the increased scrutiny faced by the cryptocurrency business.

Individuals and companies involved with digital assets must prioritize compliance and take necessary precautions. This is crucial as law enforcement intensifies its efforts against illegal activities and non-compliant services.

Failure to do so could result in serious repercussions, such as legal action and financial issues.

The cryptocurrency community and regulatory bodies must work together to create a transparent and secure system to protect innovation and reduce the risks associated with illegal activities.

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