On May 28th, the Treasury Department named Liberty Reserve S.A. as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. The Treasury Department alleges that Liberty Reserve – a web-based money transfer system or "virtual currency" – is specifically designed and frequently used to facilitate money laundering in cyber space. The Treasury Department's action was taken in coordination with the unsealing of an indictment by the U.S. Attorney's Office for the Southern District of New York, which charged Liberty Reserve and seven of its principals – Arthur Budovsky, Vladimir Kats, Azzedine El Amine, Mark Marmilev, Maxim Chukharev, Ahmed Yassine Abdelghani, and Allan Esteban Hidalgo Jimenez – in Manhattan federal court for their alleged roles in running a $6 billion money laundering scheme and operating an unlicensed money transmitting business. The Financial Crimes Enforcement Network also issued a notice of proposed rulemaking that if adopted, would prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving Liberty Reserve. The NPRM also proposes to require covered financial institutions to apply special due diligence to their correspondent accounts maintained on behalf of foreign banks to guard against any transactions involving Liberty Reserve. Treasury Department Press Release.
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Treasury Department designates digital currency provider under the USA PATRIOT Act
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