Following FinCEN’s issuance of guidance on the applicability of the Bank Secrecy Act to virtual currency in March 2013 (see April 2, 2013 Alert), the Department of Treasury announced that it named, for the first time, a virtual currency provider as a "financial institution of primary money laundering concern" under Section 311 of the USA PATRIOT Act. Treasury considers the provider to be widely used by criminals worldwide to store, transfer, and launder the proceeds of a variety of illicit web-based activity, including identity fraud, credit card theft, online scams, and dissemination of computer malware. The regulatory action was made in conjunction with the unsealing of an indictment against the provider and certain of its principals, alleging a $6 billion money laundering scheme and the operation of an unlicensed money transmitting business. In conjunction with the announcement, FinCEN, issued a notice of proposed rulemaking that, if adopted, would prohibit covered U.S. financial institutions from processing foreign bank transactions involving the provider.
Alert June 11, 2013