FinCEN, the Financial Crimes Enforcement Network, has levied its first fine on a virtual currency exchange.
Ripple Labs, which distributes and exchanges its own cryptocurrency, XRP, is being fined $US700,000 by FinCEN, a division of the Treasury Department, for “acting as a money services business (MSB), and selling its virtual currency… without registering with FinCEN,” as well as for “failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers,” according to FinCEN.
Ripple and FinCEN have agreed on a “remedial framework” in order to bring Ripple into compliance.
From now on, Ripple has agreed to:
…only transact XRP and “Ripple Trade” activity through a registered MSB; to implement and maintain an effective AML program; to comply with the Funds Transfer and Funds Travel Rules; to conduct a three-year “look-back” to require suspicious activity reporting for prior suspicious transactions; and a requirement for the companies to retain external independent auditors to review their compliance with the BSA every two years up to and including 2020. Pursuant to the agreement, Ripple Labs will also undertake certain enhancements to the Ripple Protocol to appropriately monitor all future transactions.