FinCEN recently flexed its enforcement muscles by bringing criminal charges against a New Orleans man for failing to register his money transmitting business.
FinCEN - the U.S. Treasury Financial Crimes Enforcement Network - has jurisdiction under the Bank Secrecy Act to regulate transfers of cash in order to fight money laundering. Under that authority, FinCEN has adopted regulations that prohibit persons from engaging in a "money transmitting business" without a license from FinCEN.
Recently, FinCEN exercised its enforcement power under these regulations by indicting Michael Yusko, III, age 46, with operating an unlicensed money transmitting business, in violation of Title 18, United States Code, Section 1960.
Under FinCEN's regulations, any business that engages in “the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means” is a "money transmitting business". Such businesses include those that trade fiat currency, such as U.S. dollars, for cryptocurrency, such as Bitcoin, Litecoin, and Ethereum.
According to court documents, Yusko was the owner and manager of Nervous Light Capital LLC. He used Nervous Light Capital, along with the bank accounts of four other companies, to sell Bitcoin and other cryptocurrencies to customers. Yusko did not register any of these companies with FinCEN as money transmitting businesses. If convicted, YUSKO may receive a maximum of five years in prison, a maximum $250,000.00 fine, up to three years of supervised release, and a $100 mandatory special assessment.
This prosecution underscores the risks to entrepreneurs who develop business plans based on transactions in Bitcoin and other cryptocurrencies. FinCEN is acutely aware of the risk that cryptocurrency creates for money laundering and other criminal activities. FinCEN uses its regulatory authority to require every money transmitting business to register with FinCEN. By publicizing this prosecution, FinCEN is giving notice to entrepreneurs it takes its regulatory obligation seriously and that it will prosecute as a crime any failure to register.