Policy Update: FBI Cautions Against Unregistered Crypto Money Transmission Services

The Federal Bureau of Investigation (FBI) in the United States has issued a warning urging individuals to avoid unregistered cryptocurrency money transmission services. A statement from the FBI’s Internet Crime Complaint Center (IC3) emphasizes the risks associated with utilizing crypto services provided by entities that are not registered as Money Services Businesses (MSBs) according to federal law and do not comply with anti-money laundering regulations.

To prevent inadvertently using non-compliant services, the FBI recommends taking simple precautions. For example, it is advisable to steer clear of cryptocurrency money transmission services that do not collect know your customer (KYC) information from customers as required. KYC information typically includes personal details like name, date of birth, and address, among other relevant information.

Moreover, the FBI advises verifying the registration status of a business as a Money Services Business by utilizing a tool offered by the U.S. Financial Crimes Enforcement Network (FinCEN). Notably, reputable crypto firms like Coinbase and Kraken (officially known as Payward Financial Inc) were identified when The Block used this tool.

The FBI’s statement also highlights recent law enforcement actions against cryptocurrency services operating without the necessary licenses as mandated by federal law. Individuals who use unlicensed cryptocurrency money transmission services may encounter financial disruptions during law enforcement operations, especially if their cryptocurrency holdings are mixed with funds obtained through illicit means.

Users are also warned against using crypto services that do not request KYC information such as name or address before facilitating cryptocurrency transactions. The FBI points out that applications found in app stores may not always adhere to federal regulatory requirements or provide legitimate services.

The FBI stresses that cryptocurrency money transmission services found to intentionally violate the law or facilitate illegal transactions will be investigated by law enforcement agencies. Utilizing a service that fails to meet its legal obligations could lead to users losing access to their funds following law enforcement actions against non-compliant businesses.

Please be aware that The Block is an independent media outlet that offers news, research, and data. As of November 2023, Foresight Ventures holds a majority stake in The Block, with investments in other crypto-related companies. Bitget, a crypto exchange, acts as an anchor LP for Foresight Ventures. The Block remains dedicated to providing impartial, impactful, and timely information on the crypto industry. Financial disclosures are accessible for reference.

© 2023 The Block. All Rights Reserved. This article is for informational purposes only and does not constitute legal, tax, investment, financial, or any other form of advice.

About the Author

MK Manoylov has been a reporter at The Block since 2020, joining just before bitcoin surpassed $20,000 for the first time. With nearly 1,000 articles written, MK covers various crypto news, focusing on NFTs, the metaverse, web3 gaming, funding, cybersecurity, and the broader crypto ecosystem. Holding a graduate degree from New York University’s Science, Health and Environmental Reporting Program (SHERP), MK has also covered health-related topics for WebMD and Insider. Stay updated with MK on X @MManoylov and on LinkedIn.