Financial Crime Developments, Resources and Stories: January 2025 Edition

January 16, 2025
4 min read

Welcome to the January 2025 summary of news you can use as your bank or other financial institution attempts to stay up to date on the world of BSA/AML compliance. Our monthly series of curated news about FinCrime regulatory developments, resources and stories.

In this edition, three main stories emerge:

Opposing court rulings bring confusion to the Corporate Transparency Act
U.S. state regulators fine Block Inc $80 million for insufficient money laundering controls
U.S. district judge fines BitMEX $100 million for AML Violations

Opposing court rulings bring confusion to the Corporate Transparency Act

U.S. small businesses are suffering whiplash from opposing court rulings as to whether or not they must comply with FinCEN’s beneficial ownership information (BOI) reporting requirement and its January 2025 deadline that are part of the Corporate Transparency Act (CTA).

As we noted in August 2024, most U.S. small businesses were unaware about both the BOI reporting requirement and FinCEN’s reporting deadline of January 1, 2025. To make matters worse, the multiple recent court decisions regarding the constitutionality of the reporting requirement – and whether or not FinCEN can even enforce it – have led to great confusion for businesses.

December 2024 brings 3 opposing court orders

On December 3, 2024, the U.S. District Court for the Eastern District of Texas enjoined (prevented) FinCEN from enforcing the CTA and its beneficial ownership information reporting rule. It also enjoined FinCEN’s January 1, 2025 filing deadline for companies required to report.

But then, on December 23, 2024, a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit issued an order to stay (halt) the Eastern District of Texas court’s preliminary injunction. That put the BOI reporting requirement back in place. Due to the confusion, FinCEN extended the compliance date for most reporting companies from January 1, 2025, to January 13, 2025.

But then again, on December 26, 2024 came the biggest shock of all. Suddenly, the clerk of the Fifth Circuit (under direction of the court) entered a Vacate Order that set aside the December 23^rd Stay Order to give the Fifth Circuit’s merits panel time to consider “weighty substantive arguments” put forth by the parties to the litigation regarding the CTA and the BOI reporting requirement. In other words, the CTA and its BOI reporting requirement were once again halted. Needless to say, small businesses and their legal advisors had no idea what to do regarding the CTA and BOI. They certainly couldn’t trust the stability or reliability of any court ruling and have had to continuously check with FinCEN on any newer developments.

What is FinCEN saying now?

The homepage of FinCEN.gov simply says this: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

Of course, this could all change. So, small businesses would do well to continuously check FinCEN’s website for the latest developments.

US state regulators fine Block Inc $80 million for insufficient money laundering controls

According to Reuters, the fintech firm Block Inc has agreed to pay a fine of $80 million to a group of 48 state financial regulators after the agencies determined the company had insufficient policies for policing money laundering through its mobile payment service, Cash App.

As part of the settlement with the 48 states, Block must hire an independent consultant to review its BSA/AML program and report any deficiencies back to the states. Block must also take corrective actions internally, according to the Conference of State Bank Supervisors, which announced the settlement.

Block issued its own statement, stating that the issues were principally related to Cash App’s prior compliance program and that Block has significantly increased investment in compliance and risk management.

U.S. District Judge Fines BitMEX $100 Million for AML Violations

The cryptocurrency exchange BitMEX has been fined $100 million for deliberately ignoring U.S. AML laws in order to boost revenue, said the U.S. Department of Justice this week.

BitMEX, also known as HDR Global Trading, was sentenced by U.S. District Judge John Koeltl in Manhattan, after pleading guilty last July (2024).

The sentence includes two years of probation. BitMEX and its founders, who entered related guilty pleas in 2022 and were sentenced to probation, previously paid approximately $110 million in related criminal and civil cases, according to Reuters citing court papers.

Prosecutors accused BitMEX and founders Benjamin Delo, Arthur Hayes, and Samuel Reed of willfully violating the Bank Secrecy Act between 2015 and 2020 by failing to adopt AML controls and “know your customer” (KYC) programs. Prosecutors say that these failings effectively turned the BitMEX exchange into a money laundering platform.