Do We Need KYC/AML: The Bank Secrecy Act and Virtual Currency Exchanges

Authors

Stan Sater, Founders Legal Bekiares Eliezer

Keywords

Financial Crimes Enforcement Network (FinCEN), financial information reporting, overregulation

Abstract

"Technology is moving faster than government or law can keep up. It's moving faster than you can keep up: you should be asking the question of what are your rights and who owns your data. - Gus Hunt, 2013 CIA Chief Technology Officer1 The Currency and Foreign Transactions Reporting Act, commonly referred to as the Bank Secrecy Act (the BSA), is the U.S. government’s 800-pound gorilla when it comes to regulating virtual currency.2 It has been expanded, transformed, and updated since its initial passage in 1970 to keep pace with new developments in global terrorism and money laundering, all the while only being challenged twice on its constitutional merits.3 The BSA, as notably amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), imposes financial recordkeeping and reporting requirements, know your customer (KYC) requirements, and requirements to implement and maintain an anti-money laundering (AML) program. 4 Noncompliance can lead to both civil money penalties of varying amounts and criminal penalties of up to twenty-years imprisonment. 5

Recommended Citation

Stan Sater, Do We Need KYC/AML: The Bank Secrecy Act and Virtual Currency Exchanges, 73 Ark. L. Rev. 397 (2020).
Available at: https://scholarworks.uark.edu/alr/vol73/iss2/5