17 December 2017
visit www.ebaday.com

US authorities throw the book at Ripple Labs

06 May 2015  |  9409 views  |  1 cryptocurrencies

Ripple Labs has been fined $700,000 by the US Financial Crimes Enforcement Network (FinCEN) in the first successful civil enforcement action against a virtual currency exchange.

According to the charge sheet brought by US authorities, Ripple Labs, and its subsidiary XRP II, "willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers".

“Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws,”says FinCEN director Jennifer Shasky Calvery. “Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”

FinCen's investigation runs concurrent with a probe by the Californian US Attorney General's office, which slapped a $450,000 fine on Ripple Labs, and ordered a migration of a portion of the company's business to a separate entity in order to bring its virtual currency operation within the existing regulatory framework for money services businesses.

“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” says Richard Weber, chief, IRS Criminal Investigation. “Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”

The enforcement action, and the harsh comments by US regulators, are a substantial blow to Ripple Labs' reputation as it seeks to work with international banks to rewire the international money transfer business through the fast and frictionless exchange of its digital currency tokens in exchange for fiat currency.

In a statement, the company insists that it has not "willfully engaged in criminal activity" and points out that it has not been prosecuted for its failings.

"We couldn’t agree more with Chief Weber’s observation that a ‘Wild West environment’ is untenable in financial services," the statetment continues. "To that end, and as the government has recognised in today’s agreement, Ripple Labs has cooperated extensively with the government during its investigation and has taken a number of important steps over the years to build and strengthen our compliance programs.

"Ripple is infrastructure technology for banks to build compliant payment networks. The settlement announced today does not impede our ability to execute on those bank integrations. We’re continuing to focus on working towards an Internet of Value.”

Comments: (1)

A Finextra member
A Finextra member | 07 May, 2015, 04:53

Fincen is really making a test case example of Ripple that really has nothing to do with what they are doing these days. The impropriety all relates to the XRP currency from when Ripple was getting started and even then its because they apparently took a few weeks to register as an MSB, and on top of that, they didn't report the dodgy transactions that they actually had stopped for being dodgy. This is a fine for paperwork not being in the right place more than anything else, likely as an attempt to terrorise the rest of the cryptocurrency market.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Ripple to plug into Earthport payment network

Ripple to plug into Earthport payment network

04 December 2014  |  14023 views  |  0 comments | 7 tweets | 2 linkedin
RBS embraces crypto-currencies in hackathon challenge

RBS embraces crypto-currencies in hackathon challenge

17 November 2014  |  30968 views  |  3 comments | 16 tweets | 15 linkedin
Ripple signs first two US banks

Ripple signs first two US banks

24 September 2014  |  15589 views  |  5 comments | 18 tweets | 10 linkedin
Stripe backs Ripple founder's latest digital currency project

Stripe backs Ripple founder's latest digital currency project

01 August 2014  |  8239 views  |  0 comments | 10 tweets | 6 linkedin
Ripple price plunges on co-founders sell-off plans

Ripple price plunges on co-founders sell-off plans

23 May 2014  |  6629 views  |  0 comments | 6 tweets | 2 linkedin
Fidor to use Ripple to speed money transfers

Fidor to use Ripple to speed money transfers

06 May 2014  |  11346 views  |  0 comments | 7 tweets | 7 linkedin
Ripple opens developer portal; gets accelerator programme

Ripple opens developer portal; gets accelerator programme

05 March 2014  |  9204 views  |  0 comments | 4 tweets | 1 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.response.ncr.comvisit www.niceactimize.comvisit www.ebaday.com

Top topics

Most viewed Most shared
satelliteRipple completes XRP Lockup
10650 views comments | 3 tweets | 2 linkedin
PSD2: Laying the regulatory foundation for a new age in paymentsPSD2: Laying the regulatory foundation for...
10295 views comments | 18 tweets | 36 linkedin
Banks tap Ethereum smart contracts for MiFID II complianceBanks tap Ethereum smart contracts for MiF...
7684 views comments | 10 tweets | 10 linkedin
Banks and fintech startups join forces on blockchain-based supply chain pilotBanks and fintech startups join forces on...
7349 views comments | 19 tweets | 22 linkedin
hands typing furiouslyReshaping Customer Engagement & Da...
6771 views 0 | 4 tweets | 2 linkedin

Featured job

Competitive
Germany, Austria or Switzerland

Find your next job