19.01.2021

US Will Strictly Enforce Anti-Money Laundering In Crypto

On Nov. 15, Reuters reported that Blanco made it crystal clear that cryptocurrency companies engaged in money service businesses will have to comply with AML laws and share information about their customers.

The United States Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco said that Anti-Money Laundering (AML) laws will be strictly enforced in the world of cryptocurrencies.

Travel rule also applies to crypto

Speaking at a conference hosted by Chainalysis, a New York-based blockchain analysis company, Blanco told the audience that the so-called travel rule also applied to digital currencies and that the government expects crypto firms to comply. He said:

“It [travel rule] applies to CVCs [convertible virtual currencies] and we expect that you will comply, period. […] That’s what our expectation is. You will comply. I don’t know what the shock is. This is nothing new.”

In what has now become known as the travel rule, the Financial Action Task Force (FATF) guidelines require regulators and Virtual Asset Service Providers (VASPs) to collect and share personal data of transactions. The recommendation imposes the same standards on the cryptocurrency sector as are normally shouldered by the banking industry.

Blanco further pointed out that FinCEN has been conducting investigations that include compliance with the travel rule since 2014, adding that it is the most commonly cited violation among money service businesses engaged in digital currencies.

Anti-Money Laundering laws apply to everyone

In October, Blanco spoke at the University of Georgetown where he said that AML laws apply to everyone. Blanco pointed to the key objective of AML policy, which is obtaining information about who is involved in a given payment, saying:

“There is a reason you want to know … the person on the other side of that transaction – they might be dealing in some kind of illicit activity. Whether it’s opioids … or human smuggling on the other side … you want to know who that person is.”

Blanco told the audience at the time that it is not that hard to obtain that information. “All we’re asking for is name, address, account number, transaction, recipient, and amount,” he said, adding:

“So when you tell me you don’t know who’s on the other side, you’ve got a big problem. Because you are required to know, and that is what our expectation is going to be.”

Fintech Arm of Chinese Insurance Giant Files for US IPO After Blockchain Push

SoftBank-backed OneConnect Financial Technology, the fintech arm of China’s largest insurance company Ping An Insurance, filed a prospectus on Wednesday for an initial public offering (IPO) with the U.S. Securities and Exchange Commission (SEC). The firm plans to list its shares on NASDAQ.

OneConnect’s filing with the SEC today called for a target raise of $100 million, though that figure could go higher.

Reuters reported in September that the company was looking for a New York listing after it failed to go public in Hong Kong with a higher valuation. According to the report, the company had hoped to raise $1 billion through the IPO with a valuation of $8 billion.

The IPO’s underwriters include Morgan Stanley, Goldman Sachs, JPMorgan, HSBC and others.

The company is a unit of Ping An Insurance and directly backed by Japanese private equity giant SoftBank, which led a Series A funding round valuing OneConnect at $7.5 billion in 2018, according to Ping An’s 2018 annual report.

Ping An has filed for the second-most blockchain patents in China, with 274 at the end of the first half of 2019, according to its annual report, which said that OneConnect will dedicate 1 percent of its annual revenue to blockchain development.

OneConnect has eight dedicated research institutes and 50 technology labs working on blockchain projects across financial services industries. Its FiMax blockchain network is said to improve data-sharing and privacy processes, according to a OneConnect white paper.

Grand ambitions

The white paper detailed both its existing and future projects across trade finance, asset securitization and supply-chain financing, as well as 14 use cases that can be applied to sectors outside of banking – including healthcare, real estate and smart-city management.

OneConnect was the first member of the R3 enterprise blockchain consortium in 2016, while exploring some of its applications with the Hyperledger-based technical infrastructure.

Blockchain is one of the company’s four major business lines along with artificial intelligence, big data and cloud services that could use blockchain technologies, according to OneConnect’s website.

Two of its projects were included in the latest blockchain projects registration list filed with the China Cyberspace Administration in October. They included a data analytics platform and a blockchain-based voting and decision-making system.

According to the 2018 annual report, OneConnect has worked for more than 200 Chinese banks, 200,000 enterprises and 500 government and commercial institutions.

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