On Tuesday, May 5, the Financial Crimes Enforcement Network (FinCEN) announced that it has assessed a civil money penalty against a virtual currency exchanger for allegedly failing to register as a money services business and implement an adequate anti-money laundering program. The penalty amount was $700,000, and FinCEN’s first civil enforcement action against a virtual currency exchanger.
FinCEN alleged that, in acting as an MSB and selling its virtual currency known as XRP without registering, the fined company, Ripple Labs, Inc., and its wholly owned subsidiary, XRP II, LLC, “willfully” violated the Bank Secrecy Act.
The civil penalty announcement was in coordination with the U.S. Attorney’s Office for the Northern District of California, which also settled with Ripple Labs for a $450,000 forfeiture and resolution of possible criminal charges. The $450,000 forfeiture will be credited to partially satisfy FinCEN’s penalty against the Company.
Among the remedies that Ripple Labs agreed to in the settlements are to register with FinCEN for MSB-related activities, implement an effective AML Program and conduct a three-year “look back” period into suspicious activity reporting for relevant transactions. Ripple Labs also will be required to hire independent auditors to review its compliance with BSA requirements every two years through 2020.
For a more detailed synopsis of the enforcement action that also contains links to the settlement agreements and related documents, click here.