The joint statement by the CFTC, SEC, and FinCEN serves as a reminder to entities engaged in digital asset activities about their obligations under the Bank Secrecy Act (BSA). These obligations are essential for combating money laundering and countering the financing of terrorism (AML/CFT).

Key Points from the Joint Statement

1. Who is Affected?
   AML/CFT obligations apply to entities classified as financial institutions under the BSA, including:
   • Futures commission merchants (FCMs) and introducing brokers registered with the CFTC.
   • Money services businesses (MSBs) as defined by FinCEN.
   • Broker-dealers and mutual funds registered with the SEC.
2. Defining Digital Assets
   The term “digital assets” covers securities, commodities, and security- or commodity-based instruments like futures or swaps. Regulatory agencies evaluate an asset's economic reality and use to determine whether it qualifies as a digital asset.
3. Agency Oversight
   Different regulatory bodies oversee various aspects of compliance, such as:
   • CFTC: Monitors FCMs and brokers under the Commodity Exchange Act (CEA).
   • FinCEN: Supervises AML compliance for MSBs and other financial institutions.
   • SEC and FINRA: Ensure broker-dealers and mutual funds implement robust AML/CFT policies.
4. Compliance Requirements Under the BSA
   Financial institutions must:
   • Register with FinCEN or other relevant agencies.
   • Develop a written AML compliance program to mitigate risks and meet BSA requirements.
   • File Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).
   • Maintain transaction records and obtain sufficient customer identification information.
5. Regulatory Guidance
   The statement encourages industry participants to review applicable guidance, such as FinCEN’s 2019 advisory on digital assets, to ensure compliance and determine whether they qualify as an MSB or other regulated entity.

SEC and CFTC Statements

The SEC emphasized that broker-dealers and mutual funds must comply with AML/CFT requirements for all activities, including digital assets. Similarly, the CFTC reiterated that FCMs and brokers must implement AML procedures across all operations, not just those involving commodities.

Conclusion

Compliance with AML/CFT obligations under the BSA is critical for financial institutions operating in the digital asset space. This joint statement highlights the need for robust compliance measures to mitigate risks and ensure adherence to regulatory requirements. Entities are encouraged to review their practices and consult relevant guidance to stay compliant in this evolving regulatory landscape.