The FBI issued a warning (PSA I-042524-PSA) urging U.S. citizens to avoid unregistered cryptocurrency money transmission services, which must comply with Anti-Money Laundering (AML) regulations and register as Money Services Businesses (MSBs) according to federal law.
To identify non-compliant services, users should be wary of those that don’t perform Know Your Customer (KYC) checks, which are required procedures to verify customer identities.
The FBI is cracking down on unlicensed cryptocurrency money transmitting services (MSBs), which facilitate crypto transactions, haven’t registered with the Financial Crimes Enforcement Network (FinCEN) as required by law.
The lack of registration raises Anti-Money Laundering (AML) concerns, particularly if legal and illegal funds are mixed, and users of such unlicensed MSBs risk financial disruptions during FBI enforcement actions, potentially losing access to their crypto.
Law enforcement is cracking down on cryptocurrency money transmission services (MSBs) that deliberately violate regulations or enable criminal activity.
Utilizing such non-compliant MSBs poses a risk of losing access to your funds if they become subject to enforcement actions, which are likely to target MSBs that bypass Know Your Customer (KYC) protocols, which are anti-money laundering (AML) requirements designed to identify users.
TIPS TO PROTECT YOURSELF
Users should verify a money transmitter’s MSB registration with FinCEN’s MSB Registrant Search tool before using their services, which confirms the business is a Money Services Business (MSB) but doesn’t imply government endorsement.
Be cautious of financial services that don’t require Know Your Customer (KYC) information like name, birthdate, address, and identification before transactions. This lack of KYC procedures might indicate potential money laundering risks.
According to the Internet Crime Complaint Center, users should also exercise caution when evaluating the legitimacy of applications, especially those downloaded from app stores. Not all app stores have rigorous vetting processes, and malicious applications can potentially bypass them.
Furthermore, users should avoid services explicitly advertised for illegal activities, as cryptocurrency services pose a particular risk as some are known to be used for money laundering by criminals. Due diligence is crucial to ensuring downloaded applications and financial platforms comply with legal and regulatory requirements.
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