FinCEN Proposes Regulation On Virtual Currency Mixing: A "Primary Money Laundering Concern"

On October 19, 2023, the U.S. Treasury Department, Financial Crimes Enforcement Network (FinCEN) issued a notice of proposed rulemaking identifying certain convertible virtual currency (CVC) mixing as "a class of transactions of primary money laundering concern," pursuant to Section 311 of the USA PATRIOT Act. The proposed rule would require financial institutions subject to FinCEN's jurisdiction to maintain records of and report certain transactions involving CVC mixing, a process whereby multiple accounts are used to obscure the source, destination, and amount of a CVC transaction. According to FinCEN Director Andrea Gacki, "CVC mixing offers a critical service that allows players in the ransomware ecosystem, rogue state actors, and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains."