The Financial Crimes Enforcement Network [FinCEN] recently released guidance for money transmitter using digital currencies. Along with this, it also released a document titled ‘Advisory on Illicit Activity Involving Convertible Virtual Currency’ guiding institutions on how to identify and report “suspicious activity concerning how criminals and other bad actors exploit convertible virtual currencies”. This includes activities such as evading sanctions, money laundering, and terrorist financing.
The document stated,
“Criminals continue to exploit virtual currency to support illegal activity, money laundering, and other behavior endangering U.S. national security, including through entities facilitating its anonymous use […] This advisory highlights prominent typologies and red flags associated with such activity and identifies information […]”
Further, the report stated that unregistered platforms were being used by criminals to carry out their illegal activities, with the major ones being the darknet marketplace, P2P exchanges, money service business outside the United States, and Kiosks. More so, it also detailed 30 pointers that are “Red Flag Indicators of the Abuse of Virtual Currencies”
Under darknet marketplace, the red flag indicators were the address linked to the marketplace or illegal activity, the address mentioned on social media platform or otherwise, where it is linked to illicit activity, IP address linked to TOR, wallet called out for its suspicious source, a transaction that used mixing and tumbling services.
Even rapid conversion of cryptocurrencies for other cryptocurrencies for no apparent reason was also one of the red flags. It also stated that a customer who “declines requests for ‘know your customers’ documents or inquiries regarding sources of funds” is also a sign to watch out for. The document further prompted businesses to report these activities by providing information such as the customer’s wallet address, account information, transaction details, transaction history, IP addresses, and other login details and others.
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