On December 18, FinCEN gave another gift to the cryptocurrency industry. It proposed a rule applicable to banks and money service businesses (MSBs) aimed largely at ‘unhosted’ wallets, which are wallets that are not provided by a financial institution but instead reside on a user’s personal device or offline. This doesn’t come as a surprise, as unhosted wallets are generally understood to be of higher risk from an AML perspective.
Among other requirements, the most challenging includes collecting the name and physical address of the owner of the unhosted wallet and “any other information that uniquely identifies the transaction, the accounts, and, to the extent reasonably available, the parties involved.” However, even more challenging is that the comment period expires on January 4. Plus, because FinCEN invoked “national security imperatives,” it’s signaling that the rule may go into effect shortly after the comment period ends. Firms subject to the rule will need to act quickly to update their processes, controls and procedures. Access the press release here.