Volume 2, Issue 24

Posted on 11/5/2014

FinCEN Issues Two Administrative Rulings Regarding Virtual Currency

The Financial Crimes Enforcement Network (FinCEN) has issued two administrative rulings regarding virtual currency. One ruling addresses the application of FinCEN regulations to a virtual currency trading platform (FIN-2014-R011), and the other addresses the application of FinCEN regulations to a virtual currency payment system (FIN-2014-R012). 


FinCEN Issues Administrative Ruling on Currency Transporters
 

The Financial Crimes Enforcement Network (FinCEN) is issuing this administrative ruling (the "CT Ruling" or "this Ruling") to clarify the application of FinCEN regulations to certain persons involved in transportation of currency. Currency transporters who engage in transactions that are not covered by an exemption from money transmission (as described below) have the same regulatory obligations as other money transmitters.

 

In general terms, and subject to the conditions and criteria described herein, the combined effect of the applicable exemptions and the exceptive relief granted by the CT Ruling on the obligations of currency transporters under FinCEN regulations can be summarized as follows:

  • Where a Federal Reserve Bank or a certain type of financial institution subject to a Federal functional regulator contracts for and directs the physical transportation of value by the currency transporter, the currency transporter is exempted from money transmitter status under FinCEN's regulations exclusively with respect to such physical transportation of value.
  • Where a currency transporter, without the intervention of any third party such as a subcontractor and/or transshipper, picks up value from a person (or from a shipper acting at the direction of that person) and physically delivers the same value to the same person at another location, or to an account of that person at a Bank Secrecy Act ("BSA")-regulated financial institution, such activity alone will not result in the currency transporter being a money transmitter under FinCEN's regulations.
  • In all other scenarios (among them, where there exists transshipment - moving the same shipment from one currency transporter to another - or subcontracting; or where the currency transporter delivers value to a person different than the person from whom it picked up the value; or where the currency transporter takes more than a custodial interest in the value transported), the currency transporter will be deemed a money transmitter under FinCEN's regulations
To read the ruling in its entirety, click here

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