continuously engaged in efforts to steal and extort CVC as a means of generating and laundering
large amounts of revenue for the regime.
42
To mitigate illicit finance risks posed by CVC, the FATF has advised that countries
should consider so-called virtual assets as “property,” “proceeds,” “funds,” “funds or other
assets,” or other “corresponding value” and, consequently, should apply relevant FATF anti-
money laundering/counter-terrorist-financing measures to virtual assets.
43
Consistent with the
FATF guidance, in May 2019, FinCEN issued guidance advising that CVC-based transfers
effectuated by a nonbank financial institution may fall within the Recordkeeping and Travel
Rules, on the grounds that such transfers involve the making of a “transmittal order” by the
sender – i.e., an instruction to pay “a determinable amount of money to a recipient” – a criterion
for application of the rules.
44
However, FinCEN understands that at least one industry group has
asserted that the Recordkeeping and Travel Rules do not apply to transactions involving CVC, in
part because the group asserts that CVC is not “money” as defined by the rules.
In addition to CVCs, foreign governments—including Iran, Venezuela, and Russia—have
malware and other computer hacking tools, firearms, and toxic chemicals . . . AlphaBay required its users to transact
in digital currencies, including Bitcoin, Monero, and Ethereum.”); Dep’t of the Treasury Press Release—Remarks of
Sigal Mandelker, Under Secretary for Terrorism and Financial Intelligence (May 13, 2019),
https://home.treasury.gov/news/press-releases/sm687; Press Release, Dep’t of Justice, “Two Chinese Nationals
Charged with Laundering Over $100 Million in Cryptocurrency from Exchange Hack” at 1 (Mar. 2, 2020) (“North
Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions
imposed on it by the United States and the United Nations Security Council.”), https://www.justice.gov/opa/pr/two-
chinese-nationals-charged-laundering-over-100-million-cryptocurrency-exchange-hack. For vulnerabilities of
digital assets to securities fraud, see SEC—Investor Alert: Ponzi Schemes Using Virtual Currencies, SEC Pub. No.
153 (7/13), http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (accessed June 23, 2020); CFTC—Investor
Alert: Watch Out for Fraudulent Digital Asset and “Crypto” Trading Websites,
https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/watch_out_for_digital_fraud.html (accessed Aug. 28,
2020).
42
Dep’t of the Treasury Press Release—Remarks of Sigal Mandelker, Under Secretary for Terrorism and Financial
Intelligence (May 13, 2019), https://home.treasury.gov/news/press-releases/sm687.
43
Interpretive Note to FATF Recommendation 15 at 70.
44
FinCEN Guidance—Application of FinCEN’s Regulations to Certain Business Models Involving Convertible
Virtual Currencies at 11-12 (May 9, 2019); see also 31 CFR 1010.100(eee) (defining transmittal order) and 31 CFR
1010.410(e) and (f).