Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A6897358610360258560
#IRS: #Disclose #Crypto #Exchange #Information to #Law #Enforcement: https://lnkd.in/eUrjbPf4: A letter the tax bureau sent to a key senator says #stronger #penalties for failure to report #cryptocurrency-based #income #gains might also help deter #cyber #criminals.
Sharing information with #law #enforcement about the beneficial ownership of companies #trading #cryptocurrencies and related entities is one of several ways the #InternalRevenueService could help combat #cyber #attackers that use #DLT #decentralized #ledger #technology as a cloak for their escape, according to the bureau.
“The IRS generally may not share information it collects with [the #FinCen #Financial #Crimes #Enforcement #Network] or other law enforcement agencies, like the FBI, currently receiving” reports regarding income in excess of $10,000, the bureau said in a recent letter to Sen. Maggie Hassan, D-N.H. “If those agencies can’t receive #digitalasset #transaction information, it will significantly degrade the utility of the information they do collect.”
The #beneficial #ownership #database, which FinCEN is working to implement, has been a bipartisan effort aimed at #countering #money #laundering and various other purposes for which criminals use #shell #companies. The IRS is empowered to levy #penalties on “illicit money-transmitting businesses engaged in the use of both #crypto and #fiat #currencies,” the bureau said, adding “enhancements to these civil and criminal penalties for egregious behavior in the #cryptocurrency space could also be applied to promote voluntary #compliance.”
“#Decentralized #exchanges allow the #direct #exchange of cryptocurrency by using software to match #buyers and #sellers who wish to #trade #cryptocurrencies without an intermediary institution controlling the funds. Many decentralized exchanges have far less stringent #KnowYourCustomer requirements than the centralized exchanges, and some have no #KYC requirements at all,” she wrote. “Recent studies have found that many exchanges, both centralized and decentralized, have weak KYC requirements.”
While FinCEN has issued guidance for cryptocurrency exchanges on implementing KYC—improving the effectiveness of Suspicious Activity Reports the IRS helps to review for illicit activities like money laundering—the bureau is not currently allowed to cite a lack of compliance with KYC as grounds for an enforcement action.
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