The Federal Bureau of Investigation (FBI) has made a notice warning the public to avoid using cryptocurrency money-transmitting services that are not registered as Money Services Businesses (MSBs) with the Financial Crimes Enforcement Network (FinCEN) in the United States.
This warning highlights the legal and financial risks that are linked with the use of non-compliant platforms, in particular, those that do not follow the anti-money laundering (AML) standards and Know Your Customer (KYC) rules.
Legal and Financial Risks Highlighted
In their statement, the FBI included the importance of confirming the registration status of any cryptocurrency service provider. They claim that the use of unregistered services can cause major disruptions, particularly in law enforcement attacks on such platforms. The people using such services are at risk of being unable to access their funds if the services are shut down as a result of illegal activities. The FBI has introduced a tool developed by Fin CEN that helps to verify whether the crypto business is legally registered as an MSB.
The latest law enforcement moves had focused on unlicensed cryptocurrency transmission services, causing financial problems for those customers whose assets were pooled in with the illegal funds.
This comes after a particular case in which the FBI, in collaboration with Tether, retrieved $1.4 million in USDT from exploits against the elderly. The case included fraudulent customer support ads that tricked the victims into transferring their money to protect it, but they were then barred from accessing their money at all.
Recommendations for Safe Crypto Services
The FBI informed the public to stay away from cryptocurrency services that do not collect the required KYC information, such as customer names, addresses, and dates of birth. The collection of such data is needed for the purpose of following the AML rules and protecting the security of user transactions.
Additionally, the FBI cautions against using mobile apps for cryptocurrency transactions without checking their compliance with federal regulations since their presence in the official app store does not imply legal compliance.
Verification Tools and Resources
To support the public, the FBI recommends using FinCEN’s registration check tool to confirm that any crypto transaction service complies with federal laws. Compliant firms listed in the FinCEN database include Coinbase and Kraken (Payward Financial Inc).
This tool acts as a source of information for users to determine the legality and compliance of the chosen platforms, hence minimizing the chances of falling into the trap of unregulated entities.
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