The Director of the Financial Crimes Enforcement Network (FinCEN) has said there is a need for banks to seriously think about their cryptocurrency risk exposure.
FinCEN not only regulates AML policies in the United States, but it is one of the leading international entities in the world responsible or receiving, analyzing, and disseminating to the competent authorities disclosures of financial information.
FinCEN shares financial information and coordinates with foreign financial intelligence unit counterparts on AML/CFT efforts around the world as a leading member of Egmont Group, an international entity focused on financial information sharing and cooperation.
Some of the African member organizations who are part of the Egmont Group include:
Financial Intelligence Processing Unit (CTRF) – Algeria
Unidade de Informação Financeira (UIF-Angola) – Angola
Cellule Nationale de Traitement des Informations Financières du Bénin (CENTIF) – Benin
The National Financial Information Processing Unit (CENTIF-BF) – Burkina Faso
National Agency for Financial Investigation (NAFI) – Cameroon
Cape Verde UIF (UIF) – Cape Verde
Agence Nationale d Investigation Financière du Tchad (ANIF) – Chad
Agence Nationale D’ Investigation Financiere (ANIF) – Democratic Republic of Congo(DRC)
Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU) – Egypt
Ethiopian Financial Intelligence Centre (EFIC) – Ethiopia
National Agency for Financial Investigation (ANIF) – Gabon
Financial Intelligence Centre Ghana ( FIC) – Ghana
National Unit for the Processing of Financial Information in Côte d’Ivoire (CENTIF-CI) – Ivory Coast
Malawi Financial Intelligence Unit (FIU-Malawi) – Malawi
National Financial Intelligence Processing Unit (CENTIF-Mali) – Mali
Financial Intelligence Unit Mauritius (FIU-Mauritius) – Mauritius
Financial Information Processing Unit (UTRF) – Morocco
Financial Intelligence Centre (FIC) – Namibia
National Financial Intelligence and processing unit of Niger (CENTIF) – Niger
Nigerian Financial Intelligence Unit (NFIU) – Nigeria
National Financial Intelligence Processing Unit (CENTIF) – Senegal
Seychelles Financial Intelligence Unit (Seychelles FIU) – Seychelles
Financial Intelligence Centre (FIC) – South Africa
Financial Information Unit (FIUSU) – Sudan
Tanzania Financial Intelligence Unit (FIU) – Tanzania
Togo Financial Intelligence Unit (CENTIF Togo) – Togo
Tunisian Financial Analysis Committee (CTAF) – Tunisia
Financial Intelligence Authority (FIA) – Uganda
Financial Intelligence Centre (FIC) – Zambia
Any financial organization that interacts with dollars has to directly or indirectly share such information with FinCEN globally, including African financial institutions. All such institutions thus come under certain FinCEN regulations.
“To be clear, exchanges are not the only ones with crypto risk exposure. These risks are not unique to money services businesses or virtual currency exchangers; banks must be thinking about their crypto exposure as well.”
The statement also shows that FinCEN, for the first time, will update some of its efforts in key areas, including its work in the virtual currency space.
Some of the questions FinCEN has asked financial institutions to start considering in light of virtual currencies, include:
What baseline controls do we have in place to identify customers?
Do we have institutional or peer-to-peer virtual currency customers?
How does our financial institution interact with emerging payment systems?
Do we have the tools we need to identify and report potentially suspicious activity occurring through our financial institution?
FinCEN has stated that examiners and FinCEN will now ask these quetions when assessing the effectiveness of AML programs and these issues will be apparent when examiners visit.
It is highly likely that financial institutions, even those beyond the United States jurisdiction, including Africa, will be affected by these new changes and should seriously consider their exposure by ensuring they have efficient policies and procedures in place to mitigate risk.