FinCEN and FATF proposed Travel Rule changes

FinCEN & FATF proposed Travel Rule changes.

From 2020-10-27 through 2020-11-27 FinCEN is accepting comments on the proposed changes to the FATF travel rule. These changes are invasive to individual privacy, burdensome on small businesses, and an overreach of government regulatory authority.

Three days into the “open for public comment” phase of the proposed rule changes and many have voiced their thoughts. It is good to see people vocally opposing the rule changes. As of today, I can see that 96 comments have been submitted, of which 16 are available and publically posted. I read through the 16 available comments and I did not see any that were in support of the rule changes.

The proposed rule changes can be viewed here:

https://beta.regulations.gov/document/FINCEN_FRDOC_0001-0115

The public comments can be viewed here:

https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1726&doc_ver=1

TL;DR: FinCEN wants to lower the threshold for automatic Suspicious Activity Reporting (SAR) under the Bank Secrecy Act (BSA) that Money Services Businesses (MSB) are required to comply with to $250.00 USD on cryptocurrency transactions that cross a US border.

Additionally, FinCEN wants to change the definition of “money” to include Convertible Virtual Currencies (CVC).

This is bad for many reasons, I encourage you to take a few moments to read through the rule changes and think critically about the implications.

The day public comments were being accepted, I submitted one. I don’t see it publically available yet so I figured I would share it here:

“The proposed threshold change is a gross overreach of government authority, an intrusive privacy violation, and hinders business operations and activities. Additionally, the highlighted benefits for Law Enforcement Agencies are overstated and exaggerated. Overriding the UCC definition of money perverts State Law and undoes the progress made by states like Wyoming with well crafted UCC statutes and undermines the authority granted to those states.

Regarding government overreach, privacy violations, and hindering business; by enforcing such a threshold change, FinCEN is abusing it’s authority by stifling business operations with burdensome regulations that deputize Money Services Businesses that should be focusing on business operations. Regulations that force MSB’s to collect Know Your Customer data only serve to put customers at risk by forcing their service providers into extrajudicial decision making situations. Like this, MSB’s must keep the government’s best interest as the first priority over their customer’s best interest and this in a sense is the hijacking of free enterprise. Each instance of a customer’s personal information stored on a business server is an opportunity for that data to be miss handled, lost, stolen, or abused. Preemptively collecting such data violates customer’s privacy, bloats infrastructure requirements for MSB’s, and creates honey pots of personal data. Law Enforcement Agencies should RESPOND to acts of crime, but forcing MSB’s to preemptively collect data on their customers, monitor transactions for violations of ever changing FinCEN rules, and file BSA reports to alert authorities is essentially forcing MSB’s to carry out the federal governments dirty work so that LEA’s can have full, unrestricted insight to every customer’s transaction activity “just in case LEA’s need it”.

Regarding the overstated and exaggerated benefits to LEA’s; according to the Coin Telegraph article below, criminal activity involving cryptocurrency is approximately 1% of all cryptocurrency transactions.

https://cointelegraph.com/news/515-million-in-bitcoin-spent-on-illicit-activity-this-year-representing-1-of-total-btc-activity

The vast majority of illegal activity in the financial system comes from some of the world’s largest banks. The recently leaked FinCEN documents prove that:

https://www.bbc.com/news/uk-54226107

https://reason.com/2020/09/29/the-fincenfiles-shine-a-spotlight-on-how-banks-are-ordered-to-snoop-on-you/

Lowering the threshold to $250.00 is ignorant and clearly aimed at harming small businesses and law abiding citizens. Harming all customers with this shotgun approach will not help LEA’s in any sense. It is clearly security theater when the actual harmful illegal activity is coming from the world’s largest “most compliant” banks.

Cryptocurrencies that are not recognized as legal tender should not be subject to such regulations and surveillance, if the federal government wants to regulate something, then regulate the federally recognized broken fiat money. Clearly the legacy financial system is broken, lowering thresholds and lumping cryptocurrencies into the same broken regulatory environment is not a solution. Cryptocurrencies recognized as legal tender such as Central Bank Digital Currencies on the other hand, can fit nicely into the broken regulatory framework since they are designed to emulate their crumbling fiat counterparts.

Regarding the undermining of State Law by redefining money under UCC; the States have the authority to govern UCC, not the federal government. Wyoming for example has very clear definitions for digital assets, which distinguish “Digital Consumer Asset”, “Digital Security”, and “Virtual Currency” as mutually exclusive to each other.

Since FinCEN has adopted the definition for CVC’s as “property,” “proceeds,” “funds,” “funds or other assets,” or other “corresponding value”; overriding UCC and changing the definition of “money” from “a medium of exchange currently authorized or adopted by a domestic or foreign government.” to “(1) a medium of exchange currently authorized or adopted by a domestic or foreign government, including any digital asset that has legal tender status in any jurisdiction; and (2) CVC”, FinCEN has effectively lumped all digital assets together under the same definition and legal treatment even though states like Wyoming have clearly defined them as mutually exclusive.

In conclusion, I urge you to not implement this rule change, it is bad for small business, it is bad for customers, and it violates pre-existing State Law. Please consider focusing on the broken legacy financial system and the corrupt big banks that make up the vast majority of illegal activity. Networks like Bitcoin have worked just fine without government intervention and forcing broken policies and rules upon the MSB’s trying to build the ecosystem will not help anyone, it only hinders progress. “

Thanks for reading! I hope this got you thinking critically about your privacy, what’s at stake, and how the chess pieces have been moving into place for some time. Exercise your rights & liberties, fend off government oppression, speak your mind, make your voice heard and let your actions speak even louder than your words by opting out of the broken legacy financial system and opting into Bitcoin.