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The Financial Crimes Enforcement Network unveiled its own interpretive framework for how virtual currency businesses can do business without breaking regulations. These businesses have to register with the FinCEN, get an anti-money laundering policy in place, put a compliance officer in charge and other duties.
However, even with these new guidelines, there are still a good deal of gray areas, especially with how quickly the blockchain/cryptocurrency industry is changing. Robert A. Musiala Jr., counsel at BakerHostetler, offers some insight in how the FinCEN ruling will affect the industry and gain some insight on the gray areas.
Q. What are some of the biggest gray areas when it comes to blockchain/cryptocurrency regulation?
A. In short, there are gray areas everywhere. Blockchain and cryptocurrency have complex implications across the regulatory landscape – FinCEN, SEC, CFTC, IRS, data privacy (e.g., GDPR, CCPA), FTC and even antitrust are all areas of potential concern for businesses that are building solutions that leverage these new technologies. At the same time, within these areas, some issues have always been quite clear. The application of the Bank Secrecy Act (BSA) and FinCEN regulations governing money transmitters to persons engaged as a business in the exchange of virtual currency has been clear since FinCEN’s 2013 guidance.
Q. What impact will this FinCEN ruling have on the cryptocurrency industry?
A. I hope it will be a wake-up call that helps the industry recognize that FinCEN takes the AML risks associated with cryptocurrencies very seriously. In some ways, this particular action might be read as a sign that FinCEN intends to evaluate each of the various different types of cryptocurrency money services businesses (MSBs). Earlier FinCEN actions targeted dark market actors, foreign-based exchanges, and well-capitalized blockchain startups. With the recent action we now have enforcement against a more informal, smaller-scale type of MSB activity. The message may be that FinCEN intends to examine and enforce its regulations across every type of MSB acting in this space.
Q. What needs to be done to make cryptocurrency regulation more transparent/consistent?
A. I think building industry standards and best practices will go a long way toward helping cryptocurrencies to achieve widespread adoption. In some respects, cryptocurrencies like bitcoin and ether provide certain advantages that at least in theory, if not in practice, could be leveraged to make anti-money laundering compliance easier and more effective.
The fact that a public, timestamped record of every bitcoin and ether transaction in history exists on an unalterable ledger has massive implications for fundamental functions of AML programs like transaction monitoring, source of funds analysis and suspicious activity detection. However, it will take some time for the collective AML industry to establish widely accepted best practices for cryptocurrency AML programs. Traditional AML concepts like red flags, investigation techniques, training programs, enhanced due diligence, and written policies and procedures will all, eventually, have to be reinterpreted within the new context of cryptocurrencies.
Q. How can blockchain/cryptocurrency startups protect themselves?
A.Recognize that you are operating in a complex legal environment and take steps to understand the legal status of your business. And then follow through – get the right professionals involved and continually build and evaluate your compliance program step-by-step as you continue to build and grow your business.
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June 4, 2019
FOMO Pay, an integrated payment solution provider to merchants in Singapore, and Discover Global Network, which has more than 44 million merchant acceptance locations and 2 million ATM and cash access locations, are partnering to allow Discover cardholders to use their cards at FOMO Pay's merchants around the globe
"Offering more payment solutions has always been our goal and this is also convenient for both merchants and consumers, especially those who like to travel without cash and wish to pay for these transactions easily," Louis Liu, CEO and co-founder of FOMO Pay, said in a company press release.
The partnership continues to steer FOMO Pay in the direction of making cashless payments more efficient and convenient which is aligned with its current active role in making Singapore a cashless society, according to the release.
The FOMO Pay platform is the one-stop QR code payment solution that enables merchants to accept a vareity of payment methods including WeChat Pay, NETSPay, Grab Pay, SingTel Dash, EZLink Pay, mVISA, etc.
Topics: ATMs, Card Brands, Mobile Payments, Region: APAC
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June 4, 2019
Paysafe Group issued a new report showing a majority of consumers feared that the switch to biometrics would expose them to a greater risk of identity theft than using passwords.
The London-based company said that 81% of consumers still prefer passwords due to concerns about the effectiveness of biometrics. The report shows that 56% of consumers fear the shift to biometrics will expose them to identity fraud.
The research comes amid a movement in the digital security industry to move authentication methods away from password-based authentication towards biometrics, including fingerprints, facial recognition or other tools.
"Biometrics are a huge opportunity for the payments industry to combat the increasing risk of card not present fraud," Daniel Kornitzer, chief business development officer at Paysafe Group, said, in a company release. "However its not surprising that there is a reluctance among consumers to use biometrics as a form of payment authentication when passwords and PINs have been the central pillar of financial data security for at least 20 years."
The report examines consumer attitudes towards payment authentication just three months before the new Strong Customer Authentication standard is scheduled for implementation across much of Europe.
The research, commissioned by Paysafe and supported by London-based agency Loudhouse, involved surveys of 6,197 consumers across the U.S., U.K., Canada, Germany, Austria and Bulgaria.
Topics: Mobile Payments, Region: EMEA, Regulatory Issues, Security, Trends / Statistics
Companies: Paysafe Group
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June 4, 2019
Tink, a Stockholm-based open banking platform, announced a strategic investment from PayPal that will be used to help finance the company's European expansion.
As part of the agreement PayPal will partner with the company to leverage its account aggregation technology to improve product experiences for PayPal customers.
"Open banking is transforming financial services, allowing customers to more easily move and manage their money," Jennifer Marriner, vice president of global markets and partnerships at PayPal said in a company release. "Tink has developed the infrastructure and data services for this new financial world and we're excited to work together to continue to democratize financial services."
Tink co-founder and CEO Daniel Kjellen said the PayPal investment demonstrates the versatility of the company's technology, particularly how it can be used to demonstrate business use cases for large and small businesses.
"The investment is an indicator of the strength of the open banking movement, and it puts us firmly on the path towards our expanded connectivity goals," he said.
The PayPal investment follows an agreement last month to integrate Tink's mobile banking platform with NatWest and a February investment of $63.5 million led by Insight Venture Partners.
Topics: Mobile Banking, Mobile Payments, Region: EMEA
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June 3, 2019
The House Judiciary Committee announced an antitrust investigation of Silicon Valley, which will conduct a "top-to-bottom" review of the market power and competitive activities of major U.S. technology companies.
The bipartisan probe, announced in a Medium post, said the investigation will include a series of hearings by the Subcommittee on Antitrust, Commercial and Administrative Law on the rise of market power online. According to reports, the probe will examine several major industry players, including Apple, Amazon, Facebook and Google.
"Given the growing tide of concentration and consolidation across the economy, it is vital that we investigate the current state of competition in digital markets and the health of antitrust laws," Judiciary Committee Chairman Jerry Nadler said in a statement released on Twitter.
The probe will focus on three areas:
Documenting competition problems in digital markets.Examining whether dominant firms are engaging in anti-competitive conduct.Assessing whether existing antitrust laws, competition policies and current enforcement levels are adequate to address these issues.Harold Feld, senior vice president of Washington-based Public Knowledge, said the bipartisan probe is reminiscent of the Congressional investigation of competition in the telecommunications industry 25 years ago.
"It is refreshing to see both parties committed to a rigorous and broad analysis to understand the complexities and importance of the digital marketplace, and the increasing signs of growing dominance by a small number of companies," he said in a statement released by the organization.
A spokesperson for Amazon declined to comment. None of the remaining companies were immediately available for comment.
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Topics: Mobile/Digital Wallet, Mobile Payments, Regulatory Issues, Social Media, Technology Providers
Companies: Facebook, Google, Amazon
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