Marking the first civil enforcement action against a virtual currency transmitter, FinCEN fined Ripple Labs, the creator of the XRP alternate cryptocurrency, $700,000 for violations of the Bank Secrecy Act. According to a press release by FinCEN, the Financial Crimes Enforcement Network, Ripple Labs’ violated the Bank Secrecy Act by operating as a money services business without registering with FinCEN, and failing to implement anti-money laundering (AML) mechanisms.
Ripple Labs forfeited $450,000 and is expected to pay $250,000 to satisfy FinCEN’s civil money penalty. Additionally, Ripple Labs agreed to take “enhanced remedial measures” which include only transacting XRP through a registered services business and implementing AML safeguards for all transactions. According to FinCEN Director Jennifer Shasky Calvery, “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws.”
IRS Chief Richard Weber had the following to say:
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena. Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”