The U.S. regulator FinCEN in a press release on April 18, reported that a California based cryptocurrency trader, Eric Powers, violated the Bank Secrecy Act’s (BSA) program, registration, and reporting requirements.
Notably, Mr. Powers conducts an unregistered peer-to-peer exchange of virtual cryptocurrency. Exchangers are, by law, expected to observe the AML program as well as comply with the obligations proposed by the BSA regarding money transmitters.
According to Kenneth A. Blanco, FinCEN director, BSA Obligations affect all money transmitters regardless of their scale.
The FinCEN noted that Mr. Powers physically receive and deliver cryptocurrencies in person over the internet either by mails or wire through a depository firm. He did all his business without acquiring the legal approval from FinCEN as a money transmitter or for conducting a Money Service Business MSB.
The regulator added that Mr. Powers conducted several suspicious trading. He traded 160 bitcoins which worth about $5 million and conducted over 200 transactions physical transfer of more than $10,000 in currency; however, he failed to report such transactions.
He was also spotted to conduct business with the darknet marketplace dubbed “Silk Road” and even provide services via The Onion Router (TOR) without considering the customers’ IDs and the sources of their fund.
According to FinCEN Director Blanco, Mr. Powers was quite aware of the proposed obligations, yet he willfully violated 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,” Blanco noted.
Following the charges made against Mr. Powers regarding his trading activities, he admitted to the violations.
- Powers was penalized a fine of $35,000
- He was also barred from providing money transmission services or as a money transmitter.