U.S. Senators Propose Stricter AML Rules for Crypto

  • U.S. Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Ken) have proposed a bill that will extend KYC rules to wallet providers, miners, and validators.
  • The legislation will also require banks and money service businesses to report and keep record of certain transactions that involve self-custody wallets.

U.S. Senator Elizabeth Warren speaking at a rally in Washington Square Park, New York, 16 September 2019.
David Garcia/Shutterstock

U.S. Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Ken) have introduced a legislation to strengthen U.S. anti-money laundering (AML) rules for digital assets, the two said in a press release on 14 December.

The new bill is looking to expand U.S. know-your-customer (KYC) rules to digital asset wallet providers, miners, validators, and other network participants by directing the Financial Crimes Enforcement Network (FinCEN) to designate them as money service businesses (MSBs). The legislation also proposes that financial institutions are prohibited from using digital asset mixers, which allow individuals to obscure the origin of their crypto assets. Senator Warren said in a statement:

“The crypto industry should follow common-sense rules like banks, brokers, and Western Union, and this legislation would ensure the same standards apply across similar financial transactions. The bipartisan bill will help close crypto money laundering loopholes and strengthen enforcement to better safeguard U.S. national security.”

The legislation will also direct FinCEN to finalize and implement a rule that will require banks and MSBs to keep records of and report certain transactions that involve unhosted wallets, also known as cold storage or self-custody wallets. The bill will also require U.S. citizens to file information with the IRS regarding any off-shore crypto transaction with a value greater than $10,000.

The two Senators also wish that the Treasury Department, Securities and Exchange Commission, and Commodity and Futures Trading Commission establish AML/CFT compliance examination and review processes for the crypto entities that they regulate. The final part of the legislation will force crypto ATM operators in the U.S. to verify customer identity, and regularly provide the location and number of machines they operate.

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