Summary
of Relevant E-Cash Law
by
Mark Zavislak
This
list is intended to be non-overlapping with the previous students' list.
I. Criminal Penalties for Money Transmission by
Unlicensed Entities
18
U.S.C. ¤ 1960. Prohibition of unlicensed money transmitting businesses
(a)
Whoever knowingly conducts, controls, manages, supervises, directs, or owns all
or part of an unlicensed money transmitting business, shall be fined in
accordance with this title or imprisoned not more than 5 years, or both.
(b)
As used in this section—
(1)
the term Òunlicensed money transmitting businessÓ means a money transmitting
business which affects interstate or foreign commerce in any manner or degree
and—
(A)
is operated without an appropriate money transmitting license in a State where
such operation is punishable as a misdemeanor or a felony under State law, whether
or not the defendant knew that the operation was required to be licensed or
that the operation was so punishable;
(B)
fails to comply with the money transmitting business registration requirements
under section 5330 of title 31, United States Code, or regulations prescribed
under such section; or
(C)
otherwise involves the transportation or transmission of funds that are known
to the defendant to have been derived from a criminal offense or are intended
to be used to promote or support unlawful activity;
(2)
the term Òmoney transmittingÓ includes transferring funds on behalf of the
public by any and all means including but not limited to transfers within this
country or to locations abroad by wire, check, draft, facsimile, or courier;
and
(3)
the term ÒStateÓ means any State of the United States, the District of
Columbia, the Northern Mariana Islands, and any commonwealth, territory, or
possession of the United States.
II. Regulation of Digital Currency Issuers in the
United States
31
C.F.R. ¤ 103.11 Meaning of terms.
(uu)
Money services business. Each
agent, agency, branch, or office within the United States of any person doing
business, whether or not on a regular basis or as an organized business
concern, in one or more of the capacities listed in paragraphs (uu)(1) through
(uu)(6) of this section. Notwithstanding the preceding sentence, the term
Òmoney services businessÓ shall not include a bank, nor shall it include a
person registered with, and regulated or examined by, the Securities and
Exchange Commission or the Commodity Futures Trading Commission.
É
(5)
Money transmitter —(i)
In general. Money transmitter:
(A)
Any person, whether or not licensed or required to be licensed, who engages as
a business in accepting currency, or funds denominated in currency, and
transmits the currency or funds, or the value of the currency or funds, by any
means through a financial agency or institution, É or an electronic funds
transfer network; or
(B)
Any other person engaged as a business in the transfer of funds.
(ii)
Facts and circumstances; Limitation. Whether a person Òengages as a businessÓ É
is a matter of facts and circumstances. Generally, the acceptance and
transmission of funds as an integral part of the execution and settlement of a
transaction other than the funds transmission itself (for example, in
connection with a bona fide sale of securities or other property), will not
cause a person to be a money transmitterÉ
(vv)
Stored value. Funds or
monetary value represented in digital electronics format (whether or not
specially encrypted) and stored or capable of storage on electronic media in
such a way as to be retrievable and transferable electronically.
(l)
Established customer. A
person with an account with the financial institution, including a loan account
or deposit or other asset account, or a person with respect to which the
financial institution has obtained and maintains on file the person's name and
address, as well as taxpayer identification number ( e.g., social security or employer
identification number) or, if none, alien identification number or passport
number and country of issuance, and to which the financial institution provides
financial services relying on that information.
31
C.F.R. ¤ 103.41 Registration of money services businesses.
(a)
Registration requirement
—(1) In general. Except as provided in paragraph (a)(2) of this section,
relating to agents, each money services business (whether or not licensed as a
money services business by any State) must register with the Department of the
Treasury and, as part of that registration, maintain a list of its agents as
required by 31 U.S.C. 5330 and this section. This section does not apply to É a
person to the extent that the person is an issuer, seller, or redeemer of stored
value.
31
C.F.R. ¤ 103.22 Reports of transactions in currency.
(b)
Filing obligations —(1)
É Each financial institution É shall file a report of each deposit, withdrawal,
exchange of currency or other payment or transfer, by, through, or to such
financial institution which involves a transaction in currency of more than
$10,000.
31
C.F.R. ¤ 103.28 Identification Required.
Before
concluding any transaction with respect to which a report is required under
¤103.22, a financial institution shall verify and record the name and address
of the individual presenting a transaction, as well as record the identity,
account number, and the social security or taxpayer identification number, if
any, of any person or entity on whose behalf such transaction is to be effected.
É Verification of identity É shall be made by examination of a document, other
than a bank signature card, that is normally acceptable within the banking
community as a means of identification when cashing checks for nondepositors (
e.g., a drivers license or credit card). É In each instance, the specific
identifying information ( i.e., the account number of the credit card, the
driver's license number, etc.) used in verifying the identity of the customer
shall be recorded on the report, and the mere notation of Òknown customerÓ or
Òbank signature card on fileÓ on the report is prohibited.
31
C.F.R. ¤ Records to be made and retained by financial institutions.
(f)
Nonbank financial institutions. Each agent, agency, branch, or office located
within the United States of a financial institution other than a bank is
subject to the requirements of this paragraph (f) with respect to a transmittal
of funds in the amount of $3,000 or more:
(1)
Recordkeeping requirements.
(i) For each transmittal order that it accepts as a transmittor's financial
institution, a financial institution shall obtain and retain either É the
following information relating to the transmittal order:
(A)
The name and address of the originator;
(B)
The amount of the payment order;
(C)
The execution date of the payment order;
(D)
Any payment instructions received from the originator with the payment order;
(E)
The identity of the beneficiary's bank; and
(F)
As many of the following items as are received with the payment order:
(
1 ) The name and address of the beneficiary;
(
2 ) The account number of the beneficiary; and
(
3 ) Any other specific identifier of the beneficiary.
(G)
Any form relating to the transmittal of funds that is completed or signed by
the person placing the transmittal order.
(ii)
For each transmittal order that it accepts as an intermediary financial
institution, a financial institution shall retain É [a] record of the
transmittal order.
(iii)
for each transmittal order that it accepts as a recipient's financial
institution, a financial institution shall retain É [a] record of the
transmittal order.
(2)
Transmittors other than established customers. In the case of a transmittal order from a transmittor
that is not an established customerÉ
(ii)
If the transmittal order É is not made in person, the transmittor's financial
institution shall [also] obtain and retain a record of the name and address of
the person placing the transmittal order, as well as the person's taxpayer
identification number É or passport number and country of issuance, or a
notation in the record of the lack thereof, and a copy or record of the method
of payment ( e.g., check or credit card transaction) for the transmittal of fundsÉ
(3)
Recipients other than established customers. For each transmittal order that it accepts as a
recipient's financial institution for a recipient that is not an established
customerÉ
É
(ii)
If the proceeds are delivered other than in person, the recipient's financial
institution shall [also] retain a copy of the check or other instrument used to
effect payment, or the information contained thereon, as well as the name and
address of the person to which it was sent.
31
C.F.R. ¤ 103.20 Reports by
money services businesses of suspicious transactions.
(a)
General. (1) Every money
services business É shall file with the Treasury Department É a report of any
suspicious transaction relevant to a possible violation of law or regulation.
(2)
A transaction requires reporting under the terms of this section if it is
conducted or attempted by, at, or through a money services business, involves
or aggregates funds or other assets of at least $2,000 É and the money services
business knows, suspects, or has reason to suspect that the transaction (or a
pattern of transactions of which the transaction is a part):
(i)
Involves funds derived from illegal activity or is intended or conducted in
order to hide or disguise funds or assets derived from illegal activity (including,
without limitation, the ownership, nature, source, location, or control of such
funds or assets) as part of a plan to violate or evade any federal law or
regulation or to avoid any transaction reporting requirement under federal law
or regulation;
(ii)
Is designed, whether through structuring or other means, to evade any
requirements of this part or of any other regulations promulgated under the
Bank Secrecy ActÉ
(iii)
Serves no business or apparent lawful purpose, and the reporting money services
business knows of no reasonable explanation for the transaction after examining
the available facts, including the background and possible purpose of the
transaction.
(iv)
Involves use of the money services business to facilitate criminal activity.
É
(5)
Notwithstanding the provisions of this section, a transaction that involves solely the
issuance, or facilitation of the transfer of stored value, or the issuance,
sale, or redemption of stored value, shall not be subject to reporting
under this paragraph (a), until the promulgation of rules specifically relating
to such reporting.
31
C.F.R. ¤ 103.125 Anti-money
laundering programs for money services businesses.
(a)
Each money services business É shall develop, implement, and maintain an
effective anti-money laundering program. An effective anti-money laundering
program is one that is reasonably designed to prevent the money services
business from being used to facilitate money laundering and the financing of
terrorist activities.
(b)
The program shall be commensurate with the risks posed by the location and size
of, and the nature and volume of the financial services provided by, the money
services business.
(c)
The program shall be in writing, and a money services business shall make
copies of the anti-money laundering program available for inspection to the
Department of the Treasury upon request.
III. International Regulation of Money Transmitters
31
U.S.C. ¤ 5318A. Special measures for jurisdictions, financial institutions,
international transactions, or types of accounts of primary money laundering
concern
(a)
International Counter-Money Laundering Requirements.—
(1)
In general.— The
Secretary of the Treasury may require domestic financial institutions and
domestic financial agencies to take É special measures described in subsection
(b) if the Secretary finds that reasonable grounds exist for concluding that a
jurisdiction, É financial institution, É, class of transactions, or É type of
accounts is of primary money laundering concernÉ
_(b)
Special Measures.— The
special measures referred to in subsection (a) Éare as follows:
(1)
Recordkeeping and reporting of certain financial transactionsÉ
(2)
Information relating to beneficial ownershipÉ
(3)
Information relating to certain payable-through accountsÉ
(4)
Information relating to certain correspondent accountsÉ
(5)
Prohibitions or conditions on opening or maintaining certain correspondent or
payable-through accountsÉ
É
(c)(2)
Additional considerations.—
In making a finding É the Secretary shall consider in addition such information
as the Secretary determines to be relevant, including the following potentially
relevant factors:
(A)
Jurisdictional factors.—
In the case of a particular jurisdiction—
(i)
evidence that organized criminal groups, international terrorists, or entities
involved in the proliferation of weapons of mass destruction or missiles have
transacted business in that jurisdiction;
(ii)
the extent to which that jurisdiction or financial institutions operating in
that jurisdiction offer bank secrecy or special regulatory advantages to
nonresidents or nondomiciliaries of that jurisdiction;
(iii)
the substance and quality of administration of the bank supervisory and
counter-money laundering laws of that jurisdiction;
(iv)
the relationship between the volume of financial transactions occurring in that
jurisdiction and the size of the economy of the jurisdiction;
(v)
the extent to which that jurisdiction is characterized as an offshore banking
or secrecy haven by credible international organizations or multilateral expert
groups;
(vi)
whether the United States has a mutual legal assistance treaty with that
jurisdiction, and the experience of United States law enforcement officials and
regulatory officials in obtaining information about transactions originating in
or routed through or to such jurisdiction; and
(vii)
the extent to which that jurisdiction is characterized by high levels of
official or institutional corruption.
(B)
Institutional factors.—
In the case of a decision to apply 1 or more of the special measures described
in subsection (b) only to a financial institution or institutions, or to a
transaction or class of transactions, or to a type of account, or to all 3,
within or involving a particular jurisdiction—
(i)
the extent to which such financial institutions, transactions, or types of
accounts are used to facilitate or promote money laundering in or through the
jurisdiction, including any money laundering activity by organized criminal
groups, international terrorists, or entities involved in the proliferation of
weapons of mass destruction or missiles;
(ii)
the extent to which such institutions, transactions, or types of accounts are
used for legitimate business purposes in the jurisdiction; and
(iii)
the extent to which such action is sufficient to ensure, with respect to
transactions involving the jurisdiction and institutions operating in the
jurisdiction, that the purposes of this subchapter continue to be fulfilled,
and to guard against international money laundering and other financial crimes.