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Written by: Danny Blakesley

On April 25, 2024, the FBI issued Alert Number I-042524-PSA, cautioning Americans against using cryptocurrency money services that are not registered as Money Services Businesses (MSB) in compliance with United States federal law. This alert is a reminder of the importance of due diligence in the crypto space to prevent falling victim to fraud or unintentional financial disruptions.

Why MSB Compliance Matters
Federal regulations like 31 U.S.C. § 5330 and 31 CFR §§ 1010; 1022 are designed to protect consumers from unlawful practices. Money Services Businesses must register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and comply with anti-money laundering (AML) requirements. However, some services sidestep these regulations, presenting significant risks:

Legal Repercussions: The FBI has actively pursued unlicensed services that disregard federal laws. Customers of these services may find their assets frozen or confiscated during law enforcement operations if their funds are mixed with proceeds of illegal activities.
Financial Disruptions: Using a non-compliant service may jeopardize your funds. Law enforcement operations could shut down these services, leading to significant financial losses.

How to Protect Yourself
To safeguard your assets and verify compliance, follow these critical steps before engaging with a cryptocurrency money service:

Verify MSB Registration: Check if the service is registered with FinCEN using their MSB State Selector tool (https://www.fincen.gov/msb-state-selector). While inclusion in the database isn’t a government endorsement, it’s a vital first step in your due diligence process.
Ensure KYC Compliance: Be wary of any service that does not request standard “Know Your Customer” (KYC) information, such as your name, address, date of birth, and ID. Proper KYC protocols help ensure the service is taking AML compliance seriously.
Beware of False Legitimacy: Just because an app is in an app store does not automatically mean it’s legal or compliant. Research each platform’s reputation and compliance history before committing funds.
Avoid Dubious Services: Stay away from services that openly advertise illegal transactions or have a reputation for facilitating unlawful activity.
Report Suspicious Activity: If you suspect fraudulent or suspicious behavior, report it to the FBI’s Internet Crime Complaint Center at www.ic3.gov.

Final Thoughts
In the fast paced ever-evolving world of cryptocurrency, acuity is key. Understanding the regulatory environment and carefully vetting the services you use will help you navigate the crypto space with confidence and protect your assets from unnecessary risks. Stay proactive, stay informed, and stay secure!