The FBI in a Thursday warning emphasized the financial risks associated with using unregistered cryptocurrency transfer services, especially considering potential law enforcement actions against these platforms.
The focus of this public service announcement is on crypto transfer platforms that operate without proper registration as Money Services Businesses (MSB) and fail to comply with anti-money laundering regulations mandated by the U.S. federal law.
Such platforms are frequent targets of law enforcement operations, particularly when criminals exploit them for transferring or laundering unlawfully acquired funds, like in the case of ransomware payments.
FBI’s PSA, released on its Internet Crime Complaint Center, cautioned Americans that,
Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.
The FBI said it had recently conducted law enforcement operations against unregistered cryptocurrency transfer services “that purposely break the law or knowingly facilitate illegal transactions.” It added that these services will continue to be investigated by law enforcement.
Steps to Avoid Using Unregistered Cryptocurrency Transfer Services
For individuals considering the use of cryptocurrency transfer services, “a few simple steps can prevent unintentional use of non-compliant services,” the FBI said. The agency advised the following security tips:
- Checking the registration status as an MSB with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
- Exercising caution with financial services that do not request KYC information (such as name, date of birth, address, and ID) before facilitating money or cryptocurrency transfers.
- Understanding that the presence of an app in an app store does not necessarily signify its legality or compliance with federal requirements.
- Refraining from using services that openly advertise themselves for illegal purposes.
- Exercising vigilance when using cryptocurrency services known to be utilized by criminals for money laundering.
Samourai Wallet’s Unlicensed Money Transmitting Business Busted
The FBI’s warning comes in the wake of the recent crackdown on Samourai, an illicit cryptocurrency transfer platform that offered a crypto mixer service facilitating the laundering of funds obtained through criminal activities.
The Icelandic law enforcement authorities seized Samourai’s domains (samourai[.]io and samouraiwallet[.]com) and web servers. The Google Play Store also removed the Samourai Wallet Android mobile app that was downloaded over 100,000 times, before the seizure was initiated.
The U.S. Department of Justice charged Keonne Rodriguez and William Lonergan Hill, the platform’s founders and operators, with laundering over $100 million from various criminal enterprises through Samourai’s crypto mixing services, accruing approximately $4.5 million in fees.
According to the superseding indictment, “Since the start of the Whirlpool service in or about 2019 and of the Ricochet service in or about 2017, over 80,000 BTC (worth over $2 billion applying the BTC-USD conversion rates at the time of each transaction) has passed through these two services operated by Samourai.”
The DOJ stated, “While offering Samourai as a ‘privacy‘ service, the defendants knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion.
“Indeed, as the defendants intended and well knew, a substantial portion of the funds that Samourai processed were criminal proceeds passed through Samourai for purposes of concealment,” the unsealed indictment said.
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