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October 28, 2014

FinCEN: Bitcoin payments must follow BSA

The Financial Crimes Enforcement Network issued an administrative ruling that says a company using the virtual currency Bitcoin for payments made to merchants in the U.S. and Latin America would be considered a money transmitter required to comply with the Bank Secrecy Act.

"FinCEN finds that, if the Company sets up the System, the Company would be a money transmitter and should comply with all risk management, risk mitigation, recordkeeping, reporting, and transaction monitoring requirements corresponding to such status," the agency said in its ruling.

In August, Bitcoin and other virtual currencies were flagged in a consumer advisory from CFPB for their lack of federal deposit or share insurance safety net – causing the bureau to warn consumers about "potential issues … such as unclear costs, volatile exchange rates, the threats of hacking and scams, and that companies may not offer help or refunds for lost or stolen funds."

The bureau also announced it would accept complaints about virtual currency products via its consumer complaint database.

The better-known virtual currencies are Bitcoin, XRP and Dogecoin; they are also called digital currencies.