The United States Financial Crimes Enforcement Network (FinCEN) has ordered Eric Powers, the operator of a peer-to-peer Bitcoin exchange, to pay a fine of $35,000 for willfully violating the Bank Secrecy Act’s (BSA) registration for failing to register as a money services business, according to a press release on April 18, 2019.
FinCEN Punish Bitcoin Exchanger
As stated in its press release, the FinCEN has taken action against Eric powers, a California-based P2P Bitcoin exchanger, for allegedly running a money services business without obtaining the relevant licenses from regulators.
FinCEN has alleged that Powers willfully violated the existing Bank Secrecy Act’s (BSA) registration, program, and reporting requirements by failing to put in place robust policies that ensure compliance with the BSA guidelines.
Specifically, the watchdog has also stated that Powers did not develop, implement or maintain any form of anti-money laundering (AML) program, he failed to file Suspicious Activity Reports (SARs), Currency Transaction Reports (CTRs) and made little effort to maintain accurate records of his transactions.
Commenting on the matter, FinCEN Director, Kenneth A. Blanco stated that it is mandatory for all money transmitters to register with the FinCEN and other relevant agencies, irrespective of the size of their businesses.
“In fact, there were indications that Mr. Powers was fully aware of the rules, but willfully failed to honor them. Such failures put our financial system and national security at risk and undermine the safety and well-being of the people, as well as undercut responsible innovation in the financial sector,” he said.
Now, Powers has agreed to pay the sum of $35,000 as a penalty and has also been barred from operating any form of MSB in the country.
How Did it Work?
Powers reportedly advertised his business on the Internet and completed the transactions by either receiving or delivering payments in person or through the mail. He reportedly sent cash payments by wire or via a direct bank deposit as well.
According to the agency, Powers conducted more than 200 transactions involving the physical transfer of over $10,000 in cash and purchased more than $5 million worth of bitcoin in 160 transactions in person, without filing the necessary CTRs.
TPowers allegedly processed numerous suspicious transactions, including doing business on the darknet marketplaces, as well as servicing customers through The Onion Router (TOR), without filing a SAR or observing proper know-your-customer (KYC) measures.
For those who are unaware, TOR is an open source software that facilitates anonymous communication.
In related news, earlier in March 2019, BTCManager informed that the FBI had seized $4.5 million worth of cryptocurrency during a raid on Opioid traffickers on the darknet.