Ripple Labs Faces Fines for Bank Secrecy Act Violates

Ripple Labs, along with its subsidiary, XRP II has been fined by the Financial Crimes Enforcement Network, also known as FinCEN for failing to comply with the rules and regulations of the Bank Secrecy Act (BSA).

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The combined fined amount is reported to be $700,000.

Ripple Labs, the US regulator, did not register itself as a money services business (MSB) with FinCEN before selling XRP, which served as a digital vehicle to complete payments and transactions on the Ripple Network.

In addition to that, the company is said to not have employed the anti-money laundering (AML) procedures that are required of all the money services businesses.

The subsidiary of Ripple Labs, XRP II, went against the law when it acted as a MSB outside the periphery of a functional AML program.

As a result, a number of different transactions made by the subsidiary came under suspicion from FinCEN.

Most of the illegal activity from both the companies seemed to have occurred from somewhere between 2013 to the early days of 2014. This information was extracted from a more detailed addendum to the release.

An agreement to pay a sum of $450,000 has been reached by Ripple and its subsidiary XRP II to steer clear of possible criminal charges.

The money will be offered as a form of settlement to ease the investigation and negate the fine that the FinCEN has imposed upon them.

Jennifer Shasky Calvery, the FinCEN director, believes that her organization are making an example out of Ripple Labs and sending out a clear message of intolerance to crime to all the other exchanges in the United States that are run on digital currency.

“Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”

Since Ripple Labs and XRP II have found themselves in hot water, they are desperately trying to come up with new conditions to settle with both the FinCEN as well as the US Attorney’s Office.

This attempt at redemption is quite understandable as criminal charges of any form or shape is likely to put a massive, irrevocable dent on their reputation.

The loss in reputation will serve as a bigger blow to the future of their existence than the financial loss incurred through the fines.

At the moment, Ripple Labs have agreed to make certain “enhancements” to their system so as to avoid minimize their chances of failing to comply with the standards set by FinCEN.

They have assured to make all the necessary adjustments in their monitoring of all future transactions. Perhaps the greatest indication of their insecurity is the fact that they have agreed to biannual compliance audits from now till the year 2020.

Here are some words from a Ripple spokesperson that echoes the overall sentiment of the company towards this controversy.

"Ripple is infrastructure technology for banks to build compliant payment networks. The settlement announced today does not impede our ability to execute on those bank integrations."