USA Law and Practice Contributed by: Margo H. K. Tank, Michael Fluhr, Deborah Meshulam, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Meghan Carey, Kathleen Birrane and Eric Hall, DLA Piper LLP
regulatory and licensing regimes which may be applicable to fintechs, including AML. In January 2025, Block, a money services business, was assessed an USD80 million penalty issued by the Conference of State Bank Supervisors for various BSA/AML compliance failures. OFAC guidance provides that US sanctions compliance obligations apply equally to crypto - currencies and fiat currency transactions. Cryp - tocurrency industry members are responsible for ensuring that they do not engage, directly or indirectly, in transactions prohibited by OFAC. Additionally, there is often liability for non-US persons who “facilitate” sanctions violations by US persons. 2.15 Financial Action Task Force Standards As it relates to fintechs, the AML/CFT and sanctions rules in the US generally follow the standards and guidelines set forth by the FATF. FATF “Recommendations” are not binding on its member nations, including the US. FATF Recom - mendations and the principles underlying the US regulatory regime share fundamental concepts, including that the US and FATF generally require certain entities to register or be licensed. FATF identified as an area of improvement the US’s delay in establishing a comprehensive ben - eficial ownership information reporting regime to combat the use of shell companies. To address these concerns, the US Congress passed the Corporate Transparency Act in 2021 and FinCEN promulgated reporting rules and information- sharing requirements effective 1 January 2024. Under the rules, non-exempt companies must report personal identifying information about their beneficial owners to FinCEN.
The FATF Travel Rule requires covered virtu - al asset service providers (VASPs) to convey information regarding the identity of the pay - ment sender and recipient to other VASPs and financial institutions. The FATF Travel Rule has a reporting threshold of USD1,000 and requires the provision of detailed information about the originator and beneficiary of the transaction. FinCEN adopted the US Funds Travel Rule which requires financial institutions, including money services businesses, to transmit basic information regarding the sender and recipient (not detailed information) with the transmittal of funds equal or greater than USD3,000. Fintech compliance with the FATF and the US Travel Rules presents significant challenges, eg, the lack of standards across countries and dif - “Reverse solicitation” is an approach made by an existing or prospective customer to a finan - cial services provider where the provider has not actively encouraged the customer to contact the provider. The concept of reverse solicitation exists in the US, but it is not a codified legal principle. Depending upon the state, and at the federal level, reverse solicitation may be permissible where the provider can demonstrate that the relationship was genuinely customer-initiated. Despite the benefits of reverse solicitation, for - eign service providers may still face regulatory scrutiny and must be prepared to provide docu - mentation to support their assertions that the relationship was customer-initiated. fering implementation dates. 2.16 Reverse Solicitation
972 CHAMBERS.COM
Powered by FlippingBook