Category Archives: FinCEN

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Facebook Unveils Digital Wallet Service ‘Calibra’

Facebook has left no stone unturned to make the most awaited crypto project, Libra, a success. The company officially announced a digital wallet service namely Calibra to take off in 2020.

Calibra is a subsidiary of Facebook that will help loop people into the Libra network and would perhaps serve as a stream to generate more revenue along the course of usage. Its immediate goal is to provide financial services throughout the world. And being backed by Facebook’s wide ecosystem, this does not seem very ambitious.

Calibra is registered with the U.S. Financial Crimes Enforcement Network (FinCEN), an agency formed to combat domestic and international money laundering and other financial crimes. The digital wallet will be available on Messenger, WhatsApp and will come as a standalone iOS and Android app.

A sneak peek of Facebook's Calibra

Source – Facebook

Kevin Weil, the Vice President of product at Calibra, described dual primary functions of the wallet, that is, ensuring money is held securely for free and establishing money transfer almost as quick as a photo click at costs lower than the average international money transfer rates.

He told The Verge:

For us, WhatsApp and Messenger are great homes for Libra. A couple billion people use them. But it’s not just that they use them, but how they use them,

Messenger is to talk to close friends and family, and those are exactly the types of people you send money to. There’s a lot of overlap between the things you want out of a wallet for currency and the things you want out of a messaging app.

Although Libra is backed by some major payment processing companies like Visa, Mastercard, and PayPal, Weil said that this transfer feature requires a credit card or a bank account, a financial commodity not available to about 1.7 billion people. Calibra comes as a savior to these people as all they require is a cheap smartphone to transfer money.

Weil said that the real goal was focused on achieving a vibrant economy to be built on top of Libra, perhaps by Facebook or any other company. This would be a key factor in magnifying adoption and creating a revolution in the true sense. He said that people who would have had used only hard cash will suddenly be seen accessing digital currency on their smartphones. He added that Calibra could be successful only if the Libra network really emerged victorious.

Not long ago, Facebook was involved in one of the biggest security breaches which ended up exposing about 50 million users’ information. However, Facebook claims to have taken firm steps to keep the money safe and ensure privacy protection for the new project. Users will have to go through the same series of verification and anti-fraud processes as those adopted by banks. The report claims that if a user’s account gets hacked, Facebook will claim responsibility and provide a refund for the Libra lost. Besides this, the user data will only be accessed to a certain limit which will, in turn, be used to secure the accounts and prevent criminal activities.

Facebook has about 2.38 billion monthly active users. This wide database comes with a rather detailed information pool. It has the potential to give birth to the largest platform not only in the crypto industry but the entire financial space. David Marcus, former head of Facebook Messenger, said that the idea of decentralization when combined with the rightful digital commerce and Facebook’s enormous user base forms the infrastructure to support the cryptocurrency to skyrocket.

Meanwhile, US Rep. Maxine Waters, Chairwoman of the United States House Committee on Financial Services has called for a moratorium on Libra development until the Congress and other regulatory bodies review the project and its potential implications.

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FinCEN Fines First-Ever Bitcoin Trader under AML Laws

FinCEN Fines First-Ever Bitcoin Trader under AML Laws

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has penalized what it terms a “peer-to-peer cryptocurrency exchanger” in a historic case of Anti-Money Laundering (AML) violation by a Bitcoin trader.

California resident and Bitcoin seller/buyer Eric Powers was adjudged to have failed to comply with the Bank Secrecy Act (BSA) registration and requirements during a two-year period  between 2012 and 2014. Powers has been fined USD 35,000 and is barred from providing money transmission services.

FinCEN asserts that Powers had sold and bought Bitcoins over the internet without registering himself as a money transmitter or money service enterprise. Additionally, he had not reported suspicious crypto and fiat transactions, with the enforcement body citing 160 Bitcoin transactions worth USD 5 million as well as 200 transactions involving some USD 10,000 in physical currency transfer; all without any currency transaction report.

The trader was also accused of processing suspicious transactions without filing reports, including for darknet marketplace business transactions on Silk Road. Powers has admitted to the violations.

FinCEN director, Kenneth A Blanco, said:

“Obligations under the BSA apply to money transmitters regardless of their size… [Powers] specifically was aware of these obligations, but willfully failed to honor them… 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.”


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Canada’s Lawmakers Seek AML Regulations for Exchanges, Wallets

Canadian lawmakers are calling for tighter cryptocurrency regulations to cover anti-money-laundering (AML) and illegal activity.

Canada’s move towards further cryptocurrency regulation and transparency reflects the growing trend with governments around the world to tighten the regulatory grip on the industry. The US Securities and Exchanges Commission (SEC) has been particularly active this year in tracking down and prosecuting fraudulent cryptocurrency exchange activity.

The new calls for AML laws follow on from plans for heightened scrutiny of cryptocurrency exchanges, as announced by the Ontario Securities Commission (OSC) earlier this year due to the increase of digital currencies on the market, some of them less reputable than others.

The three new measures were proposed from the House of Commons Standing Committee on Finance (FINA); they include closer monitoring of both cryptocurrency exchanges and wallets. Added to this, MPs are calling for crypto-to-fiat exchanges to be registered as money services businesses, placing exchanges under Financial Transactions and Reports Analysis Centre (FINTRAC) supervision. FINTRAC is Canada’s federal agency for the monitoring of AML and counter-terrorist financing.

The current concern among legislators is that cryptocurrency is used for the financing of illegal activity, a common concern amongst legislators globally. It is an argument which has less traction these days after the results of numerous surveys illustrating that fiat currency is still the preferred financial tool behind organized-crime and terrorist activity. FINA’s proposal suggests:

“Law enforcement bodies must be able to properly identify and track illegal crypto-wallet hacking and failures to report capital gains.”

The government regulatory body also recommends the foundation of a licensing regime similar to that of New York State, whose BitLicense covers financial regulatory issues, independent of FinCEN rules. The Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.

A decision is yet to be made whether such a bureau should operate on a local level across Canada’s ten provinces or should be overseen by a federal regulator.

The Blockchain Association of Canada is not happy with the new proposals, suggesting that rather than take unilateral action, government authorities should cooperate with cryptocurrency exchanges in detecting any criminal activity.


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