FinCEN Penalizes P2P Trader For Violating Bank Secrecy Act’s (BSA) Money Transmission Laws

The U.S. Financial Crimes Enforcement Network (FinCEN) imposed a penalty to a trader that is accused of violating money transmission laws when he worked as peer-to-peer exchange of virtual currencies. The information was released by the regulatory agency in a statement on April 18.

FinCEN Takes Enforcement Action Against Crypto Exchanger

The crypto trader Eric Powers, a California resident, failed to be compliant with the Bank Secrecy Act’s (BSA) registration for a period of two years between 2012 and 2014. He has been selling and buying virtual currencies on the internet and he did not register himself as a money transmitter.

As per the report, Mr. Powers failed to report suspicious transactions in virtual currencies and fiat. Powers has also made 160 different transactions worth about $5 million and conducted more than 200 transactions of more than $10,000 in currency. The surprising thing is that he did not file a single currency transaction report.

Another thing that is worth mentioning is that the trader did not provide information about transactions that could be related to the Silk Road. The Silk Road was an online black market that operated in the darknet and allowed users to process transactions of illegal goods. Moreover, he has also publicized his services on sites such as Bitcointalk.org and has facilitated transactions for users trading on Mt. Gox.

Powers has admitted that he violated these rules. Kenneth A. Blanco, the director of the FinCEN, explained that he was aware of these obligations but he did not comply with them.

On the matter, Mr. Blanco added:

“Such failures put our financial system and national security at risk and jeopardize the safety and well-being of our people, as well as undercut responsible innovation in the financial services space.”

Mr. Powers will have to pay $35,000 and he will not be able to provide money transmission services. At the same time, the agency ruled in 2014 that Bitcoin payment processors and exchanges are considered money services businesses by the U.S. law.

Additionally, the director of the FinCEN revealed that the number of crypto-related SARs filed with the agency increased and exceeded 1,500 per month.