Crypto platforms associated with an increase in reports on suspicious activities

The US government's system for recognizing money laundering has been given a flood of reports on suspicious activities from a number of financial companies in San Francisco, which includes some of the world's leading trading places for cryptocurrencies, according to a new report.

Although they are known as stock exchanges, many crypto trading platforms are registered as financial service companies, a category that also includes foreign exchange dealers and money transmitter. In the case of finces, the network, the network for enforcing financial crime from the Ministry of Finance.

in San Francisco, the home of many crypto trading platforms, filed a cash service company last year 206,527 SARS, compared to 73,959 in 2020 and 14,845 in 2019, according to Dynamic Securities Analytics, an advisory company to combat money laundering in Tampa, Florida. Overall, the financial service companies in San Francisco made up for one of 15 of the almost 3.1 million SARs, which were submitted nationwide in 2021, DSA.

Since there are no cryptocurrency categories on the SARS forms, it cannot be confirmed that crypto exchange in San Francisco were responsible for increasing the submissions at fincen by financial service companies in the city.

Alison Jimenez, DSA President, said that activities of crypto exchanges were the most likely explanation for the increase, and found that fincen had published guidelines in 2019, in which dealers from "convertable virtual currencies" have to register as a cash service company and must comply with requirements to combat money laundering.

She said 65,397 of the SARS, which was submitted by financial service companies in San Francisco last year, suspected that another company was an unregistered or non-licensed financial service company-a sign that the Fincen Directive could have an impact. In comparison, there was only 122 such registrations in the nearby Santa Clara County, California, where large payment companies from the Silicon Valley like PayPal are based

COINBASE, a listed crypto tour that is registered with FinCen as a financial service company in San Francisco, warned against drawing far-reaching conclusions from the data in the DSA report. It was said that an increase in SARS registrations only signal that more potentially illegal activities were reported-and was not synonymous with an increase in money laundering.

Steven Christie, Global Head of Compliance at Kraken, a crypto exchange in San Francisco, which is registered as a financial service company, said that he sees the increase in SARS registrations listed in the DSA report as a sign of a "greater movement" of alternative payment methods that gained popular during pandemic. "Crypto is only one of many," he said.

he added: "Where there is the possibility to exchange values, there is the possibility of poor actors to try to take advantage of every platform. But you will find that the main actors in the crypto room are very demanding and have invested a lot of time, energy and resources to ensure that their platforms are safe from this type of activities."

Jimenez said her report pointed out the need for fincen to collect more detailed information about the use of cryptocurrencies in financial crime and money laundering. "There is a lot of discussion about how the crypto industry can best be regulated," she said. "We need more data."

fincen refused to comment.