Federal regulators have withdrawn plans that would have expanded reporting requirements around cryptocurrency transactions.
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The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Federal Reserve Board of Governors announced Friday (Nov. 6) that they were rescinding the proposed “Travel Rule,” and “Recordkeeping Rule,” which would have required financial institutions to collect information on transactions of $250 or more, down from an earlier threshold of $3,000.
The Recordkeeping Rule requires banks and nonbank financial institutions to collect and retain information on funds transfers and transmittals of funds that begin or end outside the U.S., while the Travel Rule requires those entitles to transmit information on those transactions.
In its filing, FinCEN noted the range of objections it had received since the proposed rules were first floated in 2020.
“Many comments argued that a threshold of $250 would impose a significant regulatory burden on financial institutions, particularly smaller financial institutions,” the filing said, adding that it could also “disrupt the ability of consumers to send remittances overseas (and could potentially drive consumers into less regulated marketplaces).”
Commenters also argued the rule would “increase the liability exposure of financial institutions required to maintain personally identifiable information,” the filing said.
In addition, many comments noted that some potentially illicit transactions below the $3,000 threshold were already being reported to FinCEN through Suspicious Activity Reports.
Meanwhile, the Bank Policy Institute (BPI) on Friday published a letter to the banking sector calling on them to strengthen their anti-money laundering (AML) and countering the financing of terrorism (CFT), writing that modernization of these areas has “left material gaps in illicit-finance coverage in the digital asset ecosystem.”
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