FinCEN Imposes $700,000 Penalty on Cryptocurrency Company Ripple Labs

By May 6, 2015Bitcoin Business
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FinCEN Imposes $700,000 Penalty on Cryptocurrency Company Ripple Labs

The Financial Crimes Enforcement Network (FinCEN), which works in close coordination with the U.S. Attorney’s Office for the Northern District of California (USAO-NDCA) has imposed a hefty penalty of $700,000 on the cryptocurrency company Ripple Labs and its subsidiary XRP II, LLC, for willful violation of the Bank Secrecy Act.

The regulatory authority noted that Ripple acted as a money services business (MSB) and sold its cryptocurrency XRP without registering with the FinCEN. Ripple Labs failed to implement and maintain the anti-money laundering (AML) program launched to curb the rising menace of criminals and terrorist organizing using virtual currencies such as Bitcoin to fund their illegal activities.

FinCEN Director Jennifer Shasky Calvery said, “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws.” Calvery also emphasized that the regulatory authorities were not anti-innovation but just pro-legal.

Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.

Remedial Actions

Both cryptocurrency firm Ripple Labs and its subsidiary XRP II have agreed to adopt remedial measures to bring their business operations in consistency with the regulatory norms. Some of them have been listed below

  • Transacting XRP and “Ripple Trade” activity through a registered MSB
  • Implementing and maintaining an effective AML program
  • Complying with the Funds Transfer and Funds Travel Rules
  • Conducting a three-year “look-back” to require suspicious activity reporting for prior suspicious transactions
  • External independent audits to review their compliance with the BSA every two years up to and including 2020.

About FinCEN

FinCEN is a regulatory body working to protect the US financial system from illicit use and domestic and foreign actions targeting the financial markets.

The regulatory authority noted that Ripple acted as a money services business (MSB) and sold its cryptocurrency XRP without registering with the FinCEN. Ripple Labs […]

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