virtual asset service providers

A proposed rule would increase Treasury’s insight into non-US crypto mixing transactions to combat illicit activities by malicious actors.

By Parag Patel, Eric S. Volkman, Douglas K. Yatter, and Deric Behar

On October 19, 2023, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) that would designate as a “primary money laundering concern” all non-US convertible virtual currency[1] mixing (CVC mixing). The NPRM would impose enhanced reporting and recordkeeping requirements for any financial transactions involving international mixers, intended to mitigate the risks of money laundering and terrorist financing.

The proposed designation is pursuant to Section 311 of the USA PATRIOT Act, which empowers the Secretary of the Treasury to require domestic financial institutions and domestic financial agencies to take certain “special measures” against foreign jurisdictions, foreign financial institutions, classes of international transactions, or types of accounts designated as a primary money laundering concern. Section 311 has heretofore been employed only against non-US financial institutions and jurisdictions rather than an individual class of transactions.