Clifford Chance

FinCEN "In the Mix" Unprecedented Use of 311 Authority to Target Class of Transactions Involving CVC Mixing as Primary Money Laundering Concern

December 18, 2023

On 19 October 2023, the Financial Crime Enforcement Network published a notice of proposed rulemaking that identifies convertible virtual currency mixing within or involving a jurisdiction outside the United States as a primary money laundering concern under Section 311 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and proposes as the special measure that "covered financial institutions" report and retain information on  certain transactions involving CVC mixing "within or involving a jurisdiction outside the United States."  FinCEN has issued the NPRM to combat the illicit use of the intentional anonymity provided CVC Mixing to obscure the proceeds of criminal activity by private and state-back cyber criminals, sanctions evaders and other nefarious actors.  This is not the first time the U.S. Department of Treasury has expressed concerns about anonymity-enhancement technologies including mixers, but it is the first time FinCEN has designated a class of transactions as a primary money laundering concern.  The NPRM is expected to garner significant industry comment, due by January 22, 2024, and has the potential to shape future development in the virtual currency sector.  The NPRM may also pave the way for future use of the "class of transactions" tool in other sectors to address specific money laundering concerns.

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