Pay close attention to this ruling. It could be the beginning of a war on Bitcoin.
Zero Hedge reports:
The Long Arm Of Uncle Sam Just Got Longer
This one’s hot off the presses. Just yesterday, our friends at the Financial Crimes Enforcement Network (FinCEN) issued a press release on its latest ruling related to foreign ‘money service businesses (MSBs).’
An MSB is a private company that provides certain financial services like check cashing, money orders, title pawn, payday loans, travelers’ checks, prepaid stored value cards, tax refund payments, etc.
Frequently, traditional MSB clients tended to be individuals without bank accounts or access to credit. But increasingly, the US government is looking at companies engaged in electronic payments, crowdsourced funding, and even microcredit finance as money service businesses.
The implication? They should all be regulated. Even if they’re not even US companies.
That’s right. FinCEN’s latest ruling suggests a foreign MSB may now be subject to US regulations AND CRIMINAL PENALTIES “even if none of its agents, agencies, branches or offices are physically located in the United States.”
FinCEN goes on to say that foreign-located MSBs must also comply with US anti-money laundering regulations and submit ‘suspicious activity reports’, i.e. assimilate into the US financial system and become yet another unpaid spy of the US government.
Further, foreign MSBs must register with FinCEN AND appoint a person residing in the United States as a legal representative in matters of compliance. If not, foreign MSBs risk severe civil and criminal penalties.
In other words, FinCEN thinks it has the authority to go after entities such as Mt. Gox that are located in Japan. Mt. Gox, along with all the other related institutions, such as SpendBitcoins.com that exchange Bitcoins for gift cards, or VirWox which exchange Second Life “Linden dollars” for Bitcoins would be subject to criminal sanction by FinCEN even if they have no physical presence in the US at all.
It should be noted that these are dictatorial decrees by FinCEN. No legislation has been passed that says FinCEN should be allowed to go after foreign businesses around the globe. FinCEN decided on its own that it has this authority.
I’m not sure if FinCEN is directly targeting Bitcoin with this latest fascist power-grab, but it certainly appears that way. FinCEN doesn’t like it when people buy and sell things without it being privy to every detail of the transaction. People might attempt to keep their own money! – gasp! People might buy evil drugs! – gasp! THE HORROR!
The relevant regulations:
On July 21, 2011, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule on definitions and other regulations relating to money services businesses (Final Rule).1 The Final Rule amended the definition of “money services business” at 31 CFR 1010.100(ff). An entity may now qualify as a money services business (MSB) under the Bank Secrecy Act (BSA) regulations based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States. The Final Rule arose in part from the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations.2 FinCEN seeks to ensure that the BSA rules apply to all persons engaging in covered activities within the United States, regardless of the person’s physical location.
The term “money services business” includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:
(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler’s checks, money orders or stored value.
(4) Seller or redeemer of traveler’s checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.
An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the definitions of: currency dealer or exchanger; check casher; issuer of traveler’s checks, money orders or stored value; and seller or redeemer of travelers’ checks, money orders or stored value. The threshold applies separately to each activity — if the threshold is not met for the specific activity, the person engaged in that activity is not an MSB on the basis of that activity.
No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.