Is Your Crypto Service Safe? FBI Targets Unregistered Businesses

The FBI warns against using unregistered cryptocurrency money transmitting services.
These services may not follow anti-money laundering rules and could lead to problems if law enforcement takes action.
To avoid issues, check if a service is registered with FinCEN and avoid those that don't ask for KYC information.

Cryptocurrency enthusiasts, beware! The regulatory storm is brewing as U.S. authorities launch an aggressive crackdown on unregistered cryptocurrency services. In a bid to safeguard consumers, the Federal Bureau of Investigation (FBI) has issued a stern warning against engaging with cryptocurrency money-transmitting services that fly under the regulatory radar.

Here’s everything you need to know.

Alarm Bells Ringing!

In a recent Public Service Announcement, the FBI sounded the alarm bells, cautioning American consumers about the dangers of patronizing unlicensed cryptocurrency money-transmitting services. These rogue entities, not compliant with federal regulations, pose grave risks to users and could potentially become targets of law enforcement actions.

This alert aims to prevent individuals from engaging with services that do not meet anti-money laundering (AML) requirements or collect required “know your customer” (KYC) information.

And There Will Be Consequences!

It’s not just talk. Beyond mere caution, the FBI’s message carries weighty implications.

The FBI notice warns customers that using unlicensed cryptocurrency services could lead to financial disruptions if these businesses are subject to law enforcement operations. Because these services often intermingle legitimate funds with those obtained through illegal means, users may lose access to their cryptocurrency or experience significant delays in regaining access.

The bureau emphasizes that law enforcement will not turn a blind eye to entities flouting regulations or facilitating unlawful transactions. With businesses in their crosshairs, the ripple effects for users could be profound, underscoring the imperative of aligning with federal statutes to avoid unexpected financial complications.

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Stay Safe: Tips for Identifying Registered Services

To help consumers avoid unregistered cryptocurrency services, the FBI offers several practical tips.

1. Verify Registration Status: Prior to engaging with a money-transmitting service, ensure it is duly registered as a Money Services Business (MSB) with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). A quick visit to the FinCEN website can confirm a service’s legitimacy.

2. Demand KYC Compliance: Exercise caution when a service omits the customary request for KYC information, encompassing vital details like name, date of birth, address, and identification. Legitimate services prioritize KYC protocols as a safeguard against illicit activities.

3. Shun Suspect Platforms: Beware of services with illegal offerings or bearing a suspicious reputation; they could be conduits for criminal money laundering. Opting for reputable and law-abiding platforms is essential.

What steps do you take to ensure a crypto service is legitimate?