FinCEN Assesses $1 Million Penalty and Seeks to Bar Former MoneyGram Executive from Financial Industry
Individual Accountability Emphasized in Civil Actions Click here to see Press Release Actual Court Documents can be seen at: http://www.fincen.gov/news_room/ea/files/Haider_Assessment.pdf http://www.fincen.gov/news_room/ea/files/USAO_SDNY_Complaint.pdf WASHINGTON, DC – The Financial Crimes Enforcement Network (FinCEN) today issued a $1 million civil money penalty(CMP) against Mr. Thomas E. Haider for failing to ensure that hiscompany abided by the anti-money laundering (AML) provisions of the Bank Secrecy Act(BSA). Concurrently, FinCEN’s representative, the U.S. Attorney’s Office for the Southern District of New York (SDNY), today filed a complaint in U.S. District Court that seeks to enforce the penalty and to enjoin Mr. Haider from employment in the financial industry. This CMP is the product of a joint investigation by FinCEN and the SDNY. From 2003 to 2008, Mr. Haider was the Chief Compliance Officer for MoneyGram International Inc. Mr. Haider oversaw MoneyGram’s Fraud Department, which collected thousands of complaints from consumers who were victims of fraudulent schemes. Mr. Haider also headed MoneyGram’s AML Compliance Department, which was charged with ensuring compliance with requirements under the BSA designed to protect the financial system against money laundering and terrorist finance. “In my job, I’ve met hundreds of compliance officers and I know them to be some of the most dedicated and trustworthy professionals in the financial industry,” said FinCEN Director Jennifer Shasky Calvery. “FinCEN and our law enforcement partners greatly depend on their judgment and their diligence in our common fight against money laundering, fraud, and terrorist finance. Mr. Haider’s failures are an affront to his peers and to his profession. With his willful violations, he created an environment where fraud and money laundering thrived and dirty money rampaged... read more
US State Bank Supervisors Issue Model Regulation for Digital Currencies
The Conference of State Bank Supervisors (CSBS) has released a draft proposal for regulating digital currency businesses. The membership group, which represents bank regulators from US state agencies but does not play a direct role in how states craft new financial rules, outlined a number of areas in which it believes companies that work with digital currencies should be supervised, including approaches to consumer protection, licensing and security. Overall, the framework echoes elements of the New York State Department of Financial Services’ (NYDFS) BitLicenseproposal. The draft framework targets those who exchange digital currencies or facilitate such activities, and explicitly identifies itself as “technology neutral”. The CSBS suggests licensing and supervision requirements should apply to businesses that exchange virtual currency for fiat currency and virtual currency for other types of virtual currency; transmit virtual currencies; and facilitate the third-party exchange, storage or transmission of virtual currencies. The latter category is defined to include wallets, vaults, kiosks, merchant-acquirers and payment processors. The draft continues: “For financial services, these activities-based regulations already exist in most state laws, generally covering the transmitting, exchanging, and/or holding of value on behalf of another. Such financial transactions or services place the activity provider in a position of trust. This position of trust is the basis for most financial services laws and regulations, and should be applied regardless of the medium of value.” The CSBS has held several meetings in the past year, which garnered participation from both regulators and members of the cryptocurrency industry. During those hearings, both the promise and challenges of the technology underlying bitcoin were explored, eliciting both positive and negative reactions from the CSBS representatives leading the talks.... read more
CFPB Proposes Strong Federal Protections for Prepaid Products
With its proposed rule to create better protections for users of prepaid access, the CFPB is not only flexing its regulatory muscle. It is expanding its reach to create federal uniformity in an area sporadically and unevenly controlled by state regulations. This is likely a prelude to expansion into other areas of non-bank services that equally lack uniformity from state to state. Entities that provide these services would be wise to pay close attention to the CFPB and apply effective controls. They should also anticipate greater CFPB participation in their daily activities. ————————————————————————————————————————- FOR IMMEDIATE RELEASE: November 13, 2014 CONTACT: Office of Communications Tel: (202) 435-7170 CONSUMER FINANCIAL PROTECTION BUREAU PROPOSES STRONG FEDERAL PROTECTIONS FOR PREPAID PRODUCTS Bureau’s Proposal Includes New ‘Know Before You Owe’ Prepaid Disclosures WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) is proposing strong, new federal consumer protections for the prepaid market. The proposal would require prepaid companies to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, provide easy and free access to account information, and adhere to credit card protections if a credit product is offered in connection with a prepaid account. The Bureau is also proposing new “Know Before You Owe” prepaid disclosures that would provide consumers with clear information about the costs and risks of prepaid products upfront. “Consumers are increasingly relying on prepaid products to make purchases and access funds, but they are not guaranteed the same protections or disclosures as traditional bank accounts,” said CFPB Director Richard Cordray. “Our proposal would close the loopholes in this market and ensure prepaid consumers are... read more
FinCEN Statement on Providing Banking Services to Money Services Businesses
FinCEN believes it is important to reiterate the fact that banking organizations can serve the MSB industry while meeting their Bank Secrecy Act obligations. Currently, there is concern that banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs, thereby eliminating them as a category of customers. Please click on the link below to read the entire FinCen Statement: FInCEN Statement on MSB Bank Account Closing NOV 10... read more
FinCen Reaffirms its Intent to Apply Strict Controls to the Virtual Currencies
In two of its most recent guidance response letters, FinCen reaffirms its intent to apply strict controls to the virtual currency world. In these latest examples you can plainly see how they are interpreting applicability of guidance to open market startups providing significant detail to support their assertion of applicability for BSA rules. Startups in the space will do well to assume these obligations and factor these issues into their deployment models and regulatory obligations if they are to mitigate market, regulatory, and investor risks. You can find this information in two FinCen PDFs below: FIN-2014-R011: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R011.pdf FIN-2014-R012: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R012.pdf... read more
FinCEN order targeting LA’s fashion district may prod institutions to review trade-based money laundering defenses
FinCEN’s GTO concerning LA’s garment district is as important for what it implies as for what it explicitly states. What it states is that a few businesses in LA’s garment district appear to have made themselves available to be used by Mexican drug cartels and money launderers. What it implies is that money laundering is not solely the concern of financial institutions. It is now a very real concern for non-financial businesses – TBML hits Main Street. The article below can be found at http://www.acfcs.org/fincen-order-targeting-las-fashion-district-may-prod-institutions-to-review-trade-based-money-laundering-defenses/ FinCEN order targeting LA’s fashion district may prod institutions to review trade-based money laundering defenses A rarely used power recently employed by the US Treasury that imposed anti-money laundering-type obligations on a wide range of businesses In Los Angeles’ Fashion District may prompt institutions to engage in a broader review of the clothing and retail sectors outside the boundaries of the order. Earlier this month, the Financial Crimes Enforcement Network (FinCEN) issued a geographic targeting order (GTO) requiring fashion-related businesses and other retailers to give greater scrutiny to cash transactions and file reports at lower thresholds. The order, which took effect October 9, will be in effect for 180 days. The order reduced the threshold at which businesses must file reports with FinCEN on cash transactions, using what is called IRS Form 8300, from $10,000 to $3,000. It includes more than 2,000 businesses, including garment and textile stores; transportation companies; travel agencies; perfume stores; electronic stores (including those that only sell cell phones); shoe stores; lingerie stores; flower/silk flower stores; beauty supply stores; and stores bearing “import” or “export” in their name. The GTO... read more
NY Law Panel: Bitcoin Won’t Get Banking Without Compliance
This article was published on October 22, 2014 @ https://www.coindesk.com/ny-law-panel-bitcoin-wont-get-banking-without-compliance/ On Tuesday morning, the New York Law School hosted the Bitcoin Law conference, drawing entrepreneurs and enthusiasts from the New York City bitcoin community, as well as many of its own aspiring lawyers. The event was moderated and largely organized by Houman Shadab, a law professor and director of the school’s Center for Business and Financial Law. Shadab has researched bitcoin and cryptocurrencies extensively, as well as hedge funds, derivatives, securitization and commercial transactions. Earlier this month he spoke to the US Commodity Futures Trading Commission on behalf of the bitcoin community. Five attorneys took the stage for a panel discussion. They were Blockchain global policy counsel and Pillsbury Winthrop Shaw Pittman counsel Marco Santori; Jerry Brito, executive director of nonprofit research and advocacy center Coin Center; Brian Koffler, president of Koffler Legal & Consulting Services; American Express VP and senior counsel Emily H Goodman Binick; and CoinComply managing director Brian Stoeckert. The discussion, titled The New Landscape for Federal and State Regulation of Cryptocurrencies, began by asking ‘Is bitcoin money?’ However, the panel found, because bitcoin is handled differently by various institutions, it may not matter. Santori said: “People like to talk about what is holding bitcoin back, and what are some of the biggest challenges today? People usually say things like ‘banking’.” He pointed out why regulation and compliance are both so critical to how banks approach bitcoin, saying: “Right now in banks and most financial institutions almost a third of their personnel are dedicated to compliance, and that tells us something: it tells us that these institutions can’t service an industry unless they’re... read more
Ribbit.me Partners with Optima Compass for Anti-Money Laundering and Compliance Services
SAN FRANCISCO, CA., October 20, 2014 – Ribbit.me™, the creator of RibbitRewards™, the world’s first global rewards program based on blockchain technology, today announced its partnership with Optima Compass, an industry leader that specializes in anti-money laundering (AML) and regulatory compliance services. The companies will work together to implement Optima’s Compliance as a Service (CAS) program, which established a gold-standard-level compliance program that serves to protect both consumers and retailers conducting business on the RibbitRewards marketplace. “Optima Compass provides robust solutions that enable companies like Ribbit.me to comply with regulations in regard to AML guidelines and sanction lists requirements,” said Sean Dennis, Ribbit.me CEO. ”Their systems and staff help us to maintain our steadfast commitment to protecting our buyers and sellers through having all of the necessary controls in place, and to be compliant with FinCen AML regulatory requirements.” “We are well-prepared to address the AML regulatory complexities involved in running innovative global businesses like the Ribbit.me marketplace,” said Jorge Guerrero, Optima’s CEO and regulatory policy leader. “Our Compliance as a Service program and our AML Compass platform are uniquely suited and specifically designed for companies like Ribbit.me to deploy world-class controls from day one of operations.” Ribbit.me plans to launch its Global Airdrop on November 1, where a pre-determined number of RibbitRewards are distributed at no cost. The Bonus Airdrop also begins November 1, allowing anyone to bid for additional RibbitRewards, auction-style. The Ribbit.me marketplace is set to open the first week of December. About Ribbit.me For more information about Ribbit.me, visit www.ribbit.me. Follow us on Facebook (facebook.com/RibbitRewards) and Twitter (@RibbitRewards). About Optima Compass For more information about... read more