US Regulators Fined Bittrex $53M For AML Violations
- The FinCEN and OFAC collaborated for the first time in the crypto space to fine Bittrex crypto exchange for violation of the Bank Secrecy Act’s (BSA’s) anti-money laundering (AML) and suspicious activity report (SAR) reporting requirements.
- OFAC believes that the platform failed to block residents of people belonging to regions wherein sanctions was imposed, and hence, it fined them $29 million.
- FinCEN imposed a fine of $24 million claiming that the firm failed to put in place rules to prevent exposure to illicit activities.
The Bittrex crypto exchange has acquired the attention of US regulators for the violation of anti-money laundering laws in the region. On October 11, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) along with the Financial Crimes Enforcement Network (FinCEN) announced that it had fined the exchange around $53 million.
The announcement said that the Washington-based crypto exchange had violated several securities laws and as a result, Bittrex will have to pay $24 million and $29 million to OFAC and FinCEN respectively. This fine marks the largest virtual currency enforcement action to date under the OFAC. Additionally, this is also the first time the OFAC and the FinCEN have partnered up in the digital assets space.
“Investigations by OFAC and FinCEN found apparent violations of multiple sanctions programs and willful violations of the Bank Secrecy Act’s (BSA’s) anti-money laundering (AML) and suspicious activity report (SAR) reporting requirements,”said the announcement from official sources.
Furthermore, the two regulatory authorities aim to “emphasize to the virtual currency industry the importance of implementing appropriate risk-based sanctions compliance controls and meeting obligations under the BSA” and has fined Bittrex to pose an example for the industry. Moreover, the FinCEN and OFAC believe that if crypto exchanges do not comply with AML and BSA laws, there is a significant risk of potential abuse by illicit actors.
“When virtual currency firms fail to implement effective sanctions compliance controls, including screening customers located in sanctioned jurisdictions, they can become a vehicle for illicit actors that threaten U.S national security,”said OFAC Director Andrea Gacki.
Moreover, it is also crucial to note that the Bittrex exchange will remit $24,280,829.20 to OFAC to settle its liability for 116,421 apparent violations of multiple sanctions programs. The regulatory authorities stated that the exchange failed to prevent people from Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using the platform between March 2014 and December 2017 and initiating approximately $263,451,600.13 worth of crypto-related transactions.
The OFAC pointed out that based on their IP address and their physical address information, Bittrex knew that these customers belonged to the jurisdictions subject to sanctions but allowed them to carry on transactions anyways. This is a violation of law for a US-based firm.
On the other hand, the FinCEN pointed out that since Bittrex failed to establish clear rules and regulations surrounding AML and BSA guidelines, the platform was exposed to illicit activities and as a result, the exchange will be paying a fine of $24 million to the authority.
“Virtual currency exchanges operating worldwide should understand both who—and where—their customers are. OFAC will continue to hold accountable firms, in the virtual currency industry and elsewhere, whose failure to implement appropriate controls leads to sanctions violations,”Gacki said.