FinCEN, the BSA, and virtual-currency businesses
An overview of federal guidance on how U.S. money-services-business rules may apply to virtual-currency activity.
The Financial Crimes Enforcement Network (FinCEN), within the U.S. Department of the Treasury, administers the Bank Secrecy Act (BSA) and issues guidance on how its regulations apply to financial activity. Virtual-currency activity is not classified solely by the technology used; the nature of the business and what it does with value matter.
FinCEN's activity-based approach
FinCEN's 2013 virtual-currency guidance distinguishes people who use virtual currency from persons who administer or exchange it as a business. A person using virtual currency to buy goods or services is generally treated differently from a business that accepts and transmits value or exchanges virtual currency for other value. The actual facts and applicable definitions must be assessed.
FinCEN's 2019 guidance on convertible virtual currency business models discusses how existing BSA regulations apply to different business models. It is guidance for analyzing activities—not a blanket rule that every crypto user, software provider, or business has the same regulatory obligations.
When a business may have additional obligations
Depending on its activities and the applicable legal analysis, a virtual-currency business may fall within a regulated category such as a money services business (MSB). Businesses should determine whether registration, an AML program, reporting, recordkeeping, or other obligations apply to their specific operations. Requirements can also differ under state law and other federal rules.
- Document the services the business actually provides.
- Assess whether the activity falls within a relevant BSA definition.
- Review current FinCEN materials and any applicable state requirements.
- Obtain advice from qualified counsel before relying on a general summary for a business decision.
Use analytics as one input
Blockchain analytics can support review of transaction and address information, but a report does not determine a business's regulatory status or replace its own BSA/AML obligations. AMLTrace is an analytics service; each organization is responsible for assessing its activities and compliance requirements.
Official source: FinCEN FIN-2013-G001 · FinCEN FIN-2019-G001
This guide is for general educational purposes only. It is not legal advice and does not determine whether a particular entity is an MSB or has a specific filing or program obligation.