CFTC, FinCen and SEC Joint “Reminder” to Cryptocurrency World of AML Requirements

On October 11, 2019, the Commodity Futures Trading Commission (the “CFTC”), the Financial Crimes Enforcement Network (“FinCen”) of the U.S. Treasury and the Securities and Exchange Commission (the “SEC”) issued a joint statement reminding “persons engaged in activities involving digital assets of  their anti-money laundering and countering of financing of terrorism (“AML/CFT”) obligations under the Bank Secrecy Act.”  The statement applied to digital assets that are securities, commodities and “security-  or commodity-based instruments such as futures or swaps” and the regulation of such assets by the CFTC, FinCen and/or the SEC.  The statement indicates that the regulators will use broad definitions with respect to the characterization of such assets and that AML/CFT obligations may apply to a broker-dealer, mutual fund, futures commission merchant or introducing broker “without regard to whether the particular transaction at issue involves a ‘security’ or ‘commodity’…”  The statement made clear that the three regulators believe that a major issue for digital asset activities is the application of AML/CFT obligations regardless of the form that they take.