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FBI warns of risks with non-KYC crypto entities

The agency urges due diligence in using crypto services to avoid legal issues.

FBI warns of risks with non-KYC crypto entities

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The Federal Bureau of Investigation (FBI) has issued a warning to US citizens regarding the use of crypto services that fail to adhere to federal regulations. Specifically, the FBI advises against engaging with companies that are not registered as Money Service Businesses (MSBs) and do not follow anti-money laundering protocols, including KYC (Know Your Customer) procedures.

“A few simple steps can prevent unintentional use of non-compliant services. For example, avoid cryptocurrency money transmitting services that do not collect know your customer (KYC) information from customers when required,” the FBI stated.

KYC is a process that is aimed at verifying the identity of customers and understanding the nature of their business relationship with a financial institution. This process typically involves collecting and verifying a customer’s personal information such as their name, address, date of birth, and government-issued ID. Depending on the type of account, businesses may also need to verify information for beneficial owners.

The FBI also suggests that users verify whether a business is registered as an MSB using the lookup tool provided by the US Financial Crimes Enforcement Network (FinCEN).

Recent law enforcement operations have targeted crypto services operating without proper licensing, leading to potential financial disruptions for users. The FBI warns that using services that intentionally violate the law or facilitate illegal transactions can result in users losing access to their funds during investigations.

To protect oneself, the FBI recommends checking MSB registration with FinCEN, being wary of services that do not request KYC information, understanding that app store availability does not guarantee legality, avoiding services that promote illegal activities, and reporting any fraudulent or suspicious activities to the FBI Internet Crime Complaint Center.

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