FinCEN Implements Stringent KYC Regulations For Digital Wallet

  • Teresa Myers
  • December 22, 2020
  • 2 minutes read
  • 3929

The USA Treasury Department has proposed KYC- Know Your Customer Regulations for the digital assets. These regulations are to be strict measures against money laundering and financial crimes. 

FinCEN is developing a post of policy advisor to oversee the implementation of KYC to the digital wallet. The Strategic Policy Officer will have to provide FinCEN with expert advice for virtual currency, cryptocurrency, and rising illegal financial risks and will help FinCEN to develop policies in making the virtual asset more secure. This officer will also assist the stakeholders and provide them guidance regarding the digital currency industry. 

FinCEN has proposed new rules that obligate banks and money service businesses to perform identity verification, keep records, keep reports on the transactions made over 3,000 USD related to digital wallets that are non-hosted. The proposal suggests that service providers must report the name and addresses of all their clients. They should also report the type of virtual currency, its amount, and the legal tender status of the digital assets used in the transaction. Time of the transactions, the value of the transaction in the USD, the name, and address of each party involved in the transaction. Every other information that identifies the transaction, account, the user, and all the parties involved must be provided as well. Forms and registrations regarding the transactions must be signed by the customer. 

The United States Treasury Secretary Steve Mnuchin said, “This rule addresses substantial national security concerns in the CVC market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime.”

This has become one of the most regulatory friendly blockchain projects. BSV wallers are verifying their user’s identities and eliminating the increase in frauds in the digital currency industry.