Why FinCEN wants details on all cross-border transactions over $250
18 Nov 2020

U.S. regulators are discussing the “why” of a new proposal that has crypto fans concerned.

Speaking Monday at the V20 Virtual Asset Service Providers Summit, Carole House, cyber and emerging tech policy specialist at the Financial Crimes Enforcement Network (FinCEN), said criminals are conducting cross-border payments using smaller amounts of cryptocurrency – hence FinCEN’s proposed lowering of the “Travel Rule” threshold.

According to the rule change proposal submitted last month, FinCEN and the Federal Reserve would modify the thresholds at which banks must collect and store fund transfer information, reducing it from $3,000 to $250 for any transfers – in crypto or fiat – that go outside the U.S.

It’s part of a general broadening of terms, said House, adding that lowering reporting thresholds for international transactions will help law enforcement and other national security authorities.

“Criminals are using smaller value transfers and virtual currencies to facilitate terrorism financing, narcotics trafficking and other illicit activities, like cybercrime,” House told V20 delegates. “So we strongly urge you to provide FinCEN with your comments on the NPRM [Notice of Proposed Rulemaking] by Nov. 27.”

FATF chance

The Travel Rule aims to prevent money laundering by identifying the originator and beneficiary of a transaction when funds of over a certain amount are transferred. Applying this rule to the pseudonymous architecture of crypto is a challenge being worked through by the Financial Action Task Force (FATF) in collaboration with local regulators and the digital asset industry.

According to FinCEN’s analysis of 2,000 suspicious transaction reports (SARs) filed between 2016 and 2019, the mean and median dollar value was $509 and $255, respectively. Almost all the transactions began or ended outside the U.S.

In response to the NPRM, Washington, D.C.-based digital asset think tank Coin Center questioned the changes to the threshold for Travel Rule obligations in terms of a proper cost-benefit analysis being absent. Such analysis should take into consideration not just the direct cost to regulated entities but the cost to individuals and society, it said.

By Ian Allision, CoinDesk, 16 November 2020

Read more at CoinDesk

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet