The Federal Bureau of Investigation (FBI) has issued a stark warning to American consumers, urging them to avoid using unregistered cryptocurrency money transmitting services that fail to comply with federal regulations.
This move comes amid heightened scrutiny and enforcement actions by U.S. authorities against various cryptocurrency services they deem to be operating illegally.
TLDR
- The FBI has warned U.S. citizens against using unregistered cryptocurrency money transmitting services that fail to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.
- These unregistered services pose risks to users, including potential financial disruptions and loss of funds if the services become targets of law enforcement actions.
- Users should verify if a crypto service is registered as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN) before using it.
- Even if a service is listed on an app store or website, it does not necessarily mean it is a legal and compliant service.
- The FBI’s warning appears aimed at privacy-focused services like coin mixers and wallets with anonymity features, which authorities allege facilitate money laundering.
In a public service announcement released on April 25th, the FBI cautioned users that engaging with cryptocurrency services not registered as Money Services Businesses (MSBs) under U.S. federal law could expose them to significant risks.
These risks include potential financial disruptions and loss of funds if the services become targets of law enforcement operations for violating regulations.
The FBI’s warning specifically targets services that do not adhere to anti-money laundering (AML) requirements or collect necessary know-your-customer (KYC) information from users.
These requirements are designed to prevent financial crimes such as money laundering and the financing of illicit activities.
To help consumers identify legitimate services, the FBI advises checking if a cryptocurrency money transmitting service is registered as an MSB with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
However, the agency clarifies that even registration does not constitute a government endorsement or certification of legitimacy.
The FBI’s warning against using unregistered #crypto money transmitters misses a “great deal of nuance,” a crypto lawyer tells Cointelegraph. pic.twitter.com/WIChlxvBry
— Cointelegraph (@Cointelegraph) April 26, 2024
The FBI warns that the mere presence of a service on an app store or listing on a third-party website does not automatically ensure its legality or compliance with regulations.
Consumers are urged to exercise caution and conduct proper due diligence before using any cryptocurrency service.
While the FBI’s announcement does not explicitly name specific services, the warning appears to be aimed at privacy-focused tools and services like coin mixers and wallets with built-in anonymity features.
Authorities have increasingly targeted such services, alleging that they facilitate money laundering and other illicit activities.
Recent high-profile enforcement actions by the FBI and other agencies include the seizure of the Samourai Wallet website and the arrest of its two co-founders on charges of operating an unlicensed money transmitting business and money laundering.
Authorities allege that the Samourai Wallet’s coin-mixing features were used for money laundering purposes. Other cases have targeted the operators of coin mixers like Tornado Cash, ChipMixer, and Helix, as well as the operators of foreign cryptocurrency exchanges such as Bitzlato and BTC-e.
While the FBI’s warning does not directly threaten users with fines or penalties, it emphasizes that individuals could face “financial disruptions” or loss of funds if their assets become intermingled with illegally obtained funds during law enforcement actions against the services they use.
