FinCEN’s First Enforcement Action Against P2P Virtual Currency Exchanger

April 23

On April 18, 2019, the Financial Crimes Enforcement Network (FinCEN), an arm of the U.S. Department of the Treasury assessed a civil money penalty against Eric Powers for willfully violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements. This was FinCEN’s first enforcement action against a peer-to-peer virtual currency exchanger and the first instance in which it has penalized an exchanger of virtual currency for failure to file Currency Transaction Reports (CTRs).

Powers advertised his intent to purchase and sell bitcoin on the internet.  He completed transactions by either physically delivering or receiving currency in person, sending or receiving currency through the mail, or coordinating transactions by wire through a depository institution.  Powers processed numerous transactions that FinCEN characterized as “suspicious” without ever filing a Suspicious Activity Reports (SAR), including doing business related to the illicit darknet marketplace “Silk Road” without taking steps to determine customer identity and whether funds were derived from illegal activity.  Powers conducted over 200 transactions involving the physical transfer of more than $10,000 in currency, yet failed to file a single CTR.

In addition to paying a $35,000 fine, Powers agreed to an industry bar that would prohibit him from providing money transmission services or engaging in any other activity that would make him a “money services business” for purposes of FinCEN regulations.

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David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.

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