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.
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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.
- Crypto exchange Bitget will make it mandatory for new users to undergo its level-1 KYC process starting 1 September, old users will have until 1 October to do the same.
- The level-1 KYC process requires users to submit a government identification and undergo facial authentication, and is in line with global regulatory guidelines.
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- The U.K. Financial Conduct Authority continues its crackdown on crypto ATMs in the country, and has disrupted a total of 26 machines since the start of the year.
- The regulator warned the public back in March 2022 that all crypto ATMs in the country were operating illegally, and issued a “shut down or face further action” order.
- The updated KYC checks will be introduced on 15 July, after which new users will be required to complete the process in order to gain full access to the exchange’s services.
- Existing users who fail to complete the KYC checks will face limitations on the platform, such as being unable to deposit new funds and only having access to certain services.