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US authorities to lower threshold for obtaining information on transactions

  • 28. Oktober 2020 at 8:00

If the new provision is implemented, crypto exchanges would have to manage a lot of sensitive user data, which would mean further risks.

The US Financial Crime Enforcement Agency (FinCEN) and the US Federal Reserve (Fed) have drastically lowered the threshold for obtaining information on transactions.

According to an announcement published on Friday, the two regulators intend to lower the previous threshold of $3,000, which was set in 1995, to $250 for international transactions. This means that financial institutions would have to provide the authorities with customer information for each transaction above $250 that takes place abroad. The so-called „travel rule“ would therefore apply to very small amounts.

The proposed amendment also specifically covers „convertible virtual currencies“, to which the new rule would also apply.

The information to be provided under the new Travel Rule is

„1.) name and address of the payer; 2) The exact payment amount or transaction order; 3) The execution date; 4) All payment instructions accompanying the payment by the payer; 5) The beneficiary’s bank or financial institution“.

A considerable amount of sensitive information must therefore be transmitted, which Bitcoin Storm Scam exchanges would then have to store in addition to the usual customer data. This would be an enormous security risk for the users. The new rule also implies that financial institutions need to know the exact location of the transactions in question.

The Financial Action Task Force on Anti-Money Laundering (FATF) is currently working on a similar provision at global level. This proposal is also highly controversial in the cryptographic industry. The extensive information gathering that it would entail is in sharp contrast to the principles of cryptocurrency, as set out, inter alia, in Bitcoin’s white paper

The amendment to the Travel Rule is still only a draft. FinCEN and Fed will collect public feedback over the next 30 days before moving on to the next round.