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Bitcoin Trader Barred, Fined For Violating AML Laws

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The US financial crimes watchdog imposed fine on a bitcoin trader for breaking anti-money laundering (AML) rules, and barred him from trading in future.

The Financial Crimes Enforcement Network (FinCEN) said cryptocurrency trader Eric Powers violated the Bank Secrecy Act's (BSA) registration and reporting requirements during 2012-2014.

FinCEN said the California resident, whom it dubs a "peer-to-peer cryptocurrency exchanger", failed to register as a money services business (MSB); had no written policies or procedures for ensuring compliance with the BSA; and failed to report suspicious transactions and currency transactions.

Powers processed numerous suspicious transactions without ever filing a SAR, including doing business related to the illicit darknet marketplace "Silk Road," as well as servicing customers through The Onion Router (TOR) without taking steps to determine customer identity and whether funds were derived from illegal activity, FinCEN said in a statement.

The U.S. regulator noted that Powers conducted over 200 transactions involving the physical transfer of more than $10,000 in currency, yet failed to file a single CTR. Out of this, he made 160 purchases of bitcoin for approximately $5 million through in-person cash transactions, conducted in public places.

This is the first enforcement action by FinCEN against a peer-to-peer crypto currency exchanger.

FinCEN penalized Powers with a fine of $35,000. He has also been prohibited from providing money transmission services or engaging in any other activity that would make him a "money services business" for purposes of FinCEN regulation.

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