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FinCEN Fines First Virtual Currency Exchanger

Jaclyn Jaeger | May 8, 2015

The Financial Crimes Enforcement Network this week fined Ripple Labs and its wholly-owned subsidiary, XRP II, $700,000 for violations of the Bank Secrecy Act while engaging in the exchange of virtual currency, and for failing to establish and maintain an appropriate anti-money laundering program. The settlement marks the first civil enforcement action against a virtual currency exchanger.

According to FinCEN, Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN. It also failed to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers.

XRP II later assumed Ripple Labs’ functions of selling virtual currency and acting as an MSB. Like Ripple Labs,...

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