FinCEN requests that information be collected on all cross-border transactions over $ 250

FinCEN requests that information be collected on all cross-border transactions over $ 250 - fincen 1024x576Speaking on Monday at the V20 Virtual Asset Service Providers Summit, Carole House, an emerging technology and cyber policy specialist at the Financial Crimes Enforcement Network (FinCEN), said criminals are making cross-border payments using smaller amounts of cryptocurrency via platforms such as Bitcoin system - hence the FinCEN proposal to lower the threshold for the "Travel Rule".

Proposed modification by FinCEN

According to the regulation amendment proposal submitted last month, the FinCEN and the Federal Reserve would like to change the thresholds for which banks must collect and store information on fund transfers, reducing it from $ 3.000 to $ 250 for any transfer - in cryptocurrency. or fiat - which goes outside the United States.

This is part of an overall expansion of terms, House said, adding that lowering reporting thresholds for international transactions will help law enforcement and other national security authorities. "Criminals are using smaller transfers of value and virtual currencies to facilitate the financing of terrorism, drug trafficking and other illicit activities, such as cybercrime," House told delegates from V20.

The first criticisms

The Travel Rule aims to prevent money laundering by identifying the sender and beneficiary of a transaction in which funds exceeding a certain threshold are transferred.

Applying this rule to cryptocurrencies is a challenge faced by the Financial Action Task Force (FATF) in partnership with local regulators and the digital asset industry.

According to FinCEN analysis, of 2.000 suspicious transaction reports filed between 2016 and 2019, the average and median dollar value was $ 509 and $ 255, respectively. Almost all transactions have begun or ended outside the United States.

Coin Center has questioned the changes to the Travel Rule threshold in terms of the absence of an adequate cost-benefit analysis. Such an analysis should consider not only the direct cost to regulated entities, but also the cost to individuals and society, he said.

Concerns from small and medium-sized businesses

There has been considerable concern from small and medium-sized businesses about the cost of compliance in general, particularly when it comes to things like the Travel Rule, which emerged at the time of the V20 Q&A.

Addressing the cost of compliance, FATF Executive Secretary David Lewis told V20 delegates that the cost of failing to comply was far greater.

"The cost of non-compliance will only have short-term benefits, one might say, and would be very shortsighted for companies that want to continue operating in this space and don't want to give their industry a bad reputation." Finally, FinCEN's Hause urged industry players to get in touch with regulators, saying they are open to innovators of the recent wave of decentralized finance (DeFi).