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CURRENT-CY NEWS & LEGAL TOKENS

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On June 30, 2021, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued its first priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy, pursuant to the Anti-Money Laundering Act of 2020 (AMLA) (collectively, the Priorities). The Priorities identify what FinCEN views as the most significant AML/CFT threats facing the U.S., which includes cybercrime, corruption, domestic and international terrorist financing, fraud, transnational criminal organizations, drug trafficking organizations, human trafficking and smuggling, and proliferation financing.

Notably, FinCEN identified virtual currency considerations in the context of cybercrime as a priority of interest, including as it relates to ransomware. In particular, FinCEN observed that while there has been substantial financial innovation in the virtual currency space, virtual currencies have nonetheless “grown as the currency of preference for a wide variety of online illicit activity.”

LEGAL TOKENS

This is not the first time the Treasury Department has identified ransomware as a cybercrime threat (see FinCEN and OFAC alerts here and here), and it certainly will not be the last. Maintaining a strong AML and sanctions compliance program will continue to be a key priority for those in the cryptocurrency and blockchain industries, particularly as it relates to ransomware and other cyber-related attacks.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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Andrew Jacobson | Associate

A former enforcement attorney at the New York State Department of Financial Services (DFS), Andrew Jacobson represents individual and institutional clients at Seward & Kissel in connection with complex governmental investigations, regulatory probes, and related civil matters. While at the DFS, Andrew was involved in early cryptocurrency issues and brought some of the most significant enforcement actions for violations of U.S. economic sanctions and anti-money laundering laws.

Andrew has extensive experience advising on matters relating to U.S. economic sanctions, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), and anti-money laundering laws. Andrew serves as Chair of the Export Controls, Sanctions, and Anti-Corruption Subcommittee of the International Bar Association, co-chair of the Virtual Commodity Association’s BSA/AML Committee, and is a member of the Digital Chamber of Commerce’s AML Task Force.

As a member of Seward & Kissel’s Blockchain and Cryptocurrency Group, Andrew regularly advises clients on all aspects of financial crimes compliance and licensing in the virtual asset industry, including:

  • OFAC and FinCEN regulatory requirements, including asset blocking and reporting obligations;

  • Unhosted wallets and risks to software providers and VASPs;

  • Privacy coins, mixers, and other external privacy mechanisms;

  • Technology and open-source user platforms;

  • Ransomware and other cyberattack-related ransom payments;

  • BitLicense and state licensing requirements; and

  • Counterparty due diligence and screening.

 

“This is certainly a lesson to senior management to take compliance seriously and that there are consequences for individuals who don’t follow the regulatory regime.”

Andrew’s thoughts on BitMEX indictment, as published in Law360 article “BitMEX Case Seen as Blessing in Disguise for Crypto Sector”

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