FinCEN Fines Ripple Labs for Bank Secrecy Act Violations

UPDATE 6th May 1:30 UTC: Ripple Labs’ official response to the FinCEN settlement has been added below.
The Financial Crimes Enforcement Network (FinCEN) has fined Ripple Labs and its subsidiary XRP II a combined $700,000 for “willful violations” of the Bank Secrecy Act (BSA).
According to a 5th May press release by the US regulator, Ripple Labs failed to register as a money services business (MSB) with FinCEN prior to selling XRP, a digital token used to settle payments on the Ripple network. Additionally, the company is said to have failed to implement appropriate anti-money laundering (AML) procedures concurrent with its responsibilities as an MSB.
Similarly, its subsidiary, XRP II, is said to have acted unlawfully as an MSB without an effective AML program, failing to report ‘several’ transactions said to be suspicious in nature.
The bulk of the violations against both companies appear to have taken place between 2013 and early 2014, according to a more detailed addendum to the release.
Notably, the agreement between Ripple Labs, its subsidiary and FinCEN has also taken place at the same time as a settlement between the companies and the US Attorney’s Office in the Northern District of California. The Internal Revenue Service’s Criminal Investigation Division also contributed to the investigation.

This post was published at Coin Desk on May 5, 2015.