The Financial Crimes Enforcement Network (FincCEN) has fined Ripple Labs and its subsidiary XRP II $700,000 for "willful violations" of the Bank Secrecy Act.
According to a 5th May press release, Ripple Labs failed to register as a money services business (MSB) prior to registering with the US regulatory agency. Additionally, the company is said to have failed to implement appropriate anti-money laundering (AML) procedures.
XRP II is said to have acted unlawfully as an MSB without an effective AML program. Additionally, the subsidiary reportedly failed to report “several” financial transactions said to be suspicious in nature.
The agreement between Ripple Labs, its subsidiary and FinCEN has taken place at the same time as a settlement between the companies and the US Attorney’s Office in the Northern District of California. According to FinCEN, Ripple and XRP II agreed to pay $450,000 and settle “possible criminal charges".
FinCEN Director Jennifer Shasky Calvery said in a statement that the event should serve as a reminder that all companies that facilitate the exchange digital currencies must bring products to market that comply with AML law.
Calvery continued:
“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.”
Ripple Labs and its subsidiary have agreed to a number of conditions to settle with both FinCEN and the US Attorney’s Office, including “enhanced remedial measures” aimed at beefing up its monitoring programs.
Notably, the settlements dictate that “certain enhancements” to the Ripple Protocol need to take place “to appropriately monitor all future transactions”.
The company has also agreed to biannual compliance audits through 2020.
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