FinCEN: Social Media Companies That Tokenize Must Follow the Law

Social media networks with crypto aspirations must guard their systems against criminal exploitation, the U.S Treasury Department’s deputy fiscal crimes enforcer said at an anti-money laundering (AML) conference.

In prepared remarks, Jamal El-Hindi, deputy director of the Financial Crimes Enforcement Network (FinCEN), said these “new payment technologies” need to be held to the same AML standards as existing financial institutions, lest they give lawbreakers a monetary loophole.  

Neither Facebook nor its Libra stablecoin were mentioned by name in the prepared remarks.

“Social media and messaging platforms and others now focusing on the establishment of cryptocurrencies cannot turn a blind eye to illicit transactions that they may be fostering,” he said.

El-Hindi said the financial sector is in an “evolutionary state” because of emerging alternatives such as virtual currencies. He said regulators, starting with his agency, as well as developers must on the watch for potential crypto-related crime. 

“We will judge emerging financial institutions on whether and how they make their systems resilient to, and report on, money laundering, terrorist financing, sanctions evasion, human and narco-trafficking and other illicit activity,” he said.

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