There is a new bill meant to combat money laundering and associated crimes, and it is taking aim at digital and cryptocurrencies like bitcoin.
The Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017, sponsored by Sen. Chuck Grassley (R-IA) and Sen. Dianne Feinstein (D-CA), includes 20 sections. Two of those are particularly relevant to digital currency and digital currency providers.
Section 6 of the bill, dealing with “Illegal Money Services Businesses” states that unauthorized money services businesses are used to transmit the proceeds from criminal activities as well as “clean” money used to fund criminal activity. This section would make a change that clarifies that those running a money service business do not necessarily need to have knowledge of the registration requirement in order to be in violation of the law – that is, ignorance of the law is not an excuse. A summary posted on Sen. Grassley’s website states, “Section 6 would make a conforming change to 18 U.S.C. § 1960(b)(1)(B) to clarify that the same general intent requirement found in 1960(b)(1)(A) applies to both of these provisions of the statute. Under both provisions, specific knowledge of the requirement to register is unnecessary.”
Section 6 also notes that because the U.S. Treasury has replaced the term “money transmitting business” with “money services business” in the regulations (because that term covers check cashiers and other services that do not transmit money), other changes to legal language should be made to reflect that change. Section 6 would also increase violations and penalties and fines for “significant” violations of the money services businesses statute. Bitcoin transmitters and exchanges must register as money services businesses, and exchange operators have been charged and prosecuted before for failing to do so – see FinCEN’s summary of such actions.
Section 13 is the part of the bill that most concerns digital currencies. This section, titled “Prepaid Access Devices, Stored Value Cards, Digital Currencies, and Other Similar Instruments,” seeks to rein in the unlawful use of devices that “are increasingly becoming effective mediums for criminals to hide and move funds across the border because they are more easily concealable than cash, and they are not covered by reporting requirements.” This section would define any funds stored in a “digital format” as “monetary instruments.” This change would make the above mentioned devices, when the value stored is above $10,000, subject to anti-money laundering (AML) reporting requirements under the Bank Secrecy Act. This section would also mandate a GAO report on the impact of the section on law enforcement and the prepaid card industry, and a Department of Homeland Security/Customs and Border Protection report to outline a strategy to detect prepaid fund and digital currency devices at border crossings and ports of entry.