REPOST: FinCEN? BSA? Huh??

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Originally posted by Barry Cohen of Barter 21.

There has been a lot of talk, rumors, and grumblings in the Complementary Currency world regarding a Guidance Memo release by FinCEN – the Financial Crimes Enforcement Network of the United States Department of the Treasury. The subject of the memo was “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies.”

You can read the entire memo athttp://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html.

The nutshell version of the memo was to clarify how operators of virtual currencies were to comply with the BSA – the Bank Secrecy Act. The act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000 (daily aggregate amount), and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.

On first read of the memo, it looked as if all barter exchanges, complementary currencies, etc. would fall under FinCen’s guidance. That got a lot of people in the industry talking and wondering how to handle it.

I did not want to wonder. I wanted to get the correct information right from the source. So I picked up the phone and called FinCEN. After a couple of phone calls back and forth with an agent, I got clarification and confirmation on what is required and what is not required:

·         Regular, every day, normal barter exchanges DO NOT fall under the guidance. It was determined that since there is no way to ‘cash out’ your barter credits, there was no need for concern.

·         However, if the barter exchange does have a cash-out option, or is backed by precious metals or some other commodity, it DOES fall under this guidance and all registering and reporting procedures must be followed.

There you have it. More information than you ever wanted on this subject. But now you have the answer to a question you didn’t even know you had.

 

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