A post on Bitcoin Money blog describes statements by FinCEN director Freis regarding Prepaid Access and on who might be required to register as a U.S. money services business (MSB). Some of Freis’ excerpts:
"The new rule was designed to be technology neutral and is meant to be adaptable to a range of products, such as a plastic card, an internet system, or a mobile phone network".
"[Criteria that determines if a product is subject to the new rules include] whether the product is reloadable, can be transferred to other consumers, and, […] can be used to transfer funds outside the United States".
"We will be publishing [a] proposal for public comment very soon [on the requirement that tangible prepaid access is declared] when it is transported across a border, similar to the existing declaration required for international transport of cash and monetary instruments".
"An entity that engages in money transmission in any amount is subject to the BSA rules"."The term ‘currency dealer or exchanger’ [has been replaced] with the new term ‘dealer in foreign exchange,’ a term used to include the exchange of instruments other than currency as a category of MSB".
"It is recognized that AML/CFT regulations need to be applied not just to banks, but rather to a range of financial and other types of commercial institutions. Why? The reason is that any way that you can move money—any way that value can be intermediated—can be abused by criminals".
"Violations by much smaller entities might also merit monetary penalties".
"Over the past year FinCEN has been engaged in an initiative to identify unregistered money services businesses, primarily independent money transmitters".
"Now that FinCEN has established a solid regulatory framework for prepaid access in the United States, we must continue to promote analogous steps in foreign jurisdictions".
A response in the Bitcoin Money post:
"Bitcoin is not a ‘prepayment of value’ that the product’s buyer would then later redeem to gain access to those funds previously paid. However, the words chosen in the ruling and in this speech are so broad that they appear to cover Bitcoin transactions as well".
"The final ruling appears to have raised little concern among the Bitcoin community".
"The state does appear to have positioned themselves with such a broad net that they could impose civil fines or criminally prosecute any miner or trader who [exchanges Bitcoins] without registering and complying".
- http://www.fincen.gov/news_room/speech/pdf/20111005.pdf (Freis’ transcript)
- http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pdf (Final Rule)
- http://www.fincen.gov/news_room/nr/pdf/20110715.pdf (Money Services Business Definition)