The first civil enforcement action against a virtual currency exchanger in the United States is now over, with the company agreeing to pay a penalty of $700,000.

The Financial Crimes Enforcement Network (FinCEN), in tandem with the US Attorney’s Office for the Northern District of California, assessed the fine against Ripple Labs Inc and its wholly-owned subsidiary, XRP II, LLC (formerly known as XRP Fund II, LLC) for failing to observe several requirements of the Bank Secrecy Act 1970.

The authorities claimed that it was acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering as one with FinCEN and by failing to implement and maintain an adequate anti-money-laundering programme which also tackled terrorist finance. XRP II later assumed Ripple Labs’ functions of selling virtual currency and acting as an MSB; however, like its parent company, XRP II failed to have an effective AML programme and report suspicious activity related to several financial transactions.

FinCEN’s assessment is concurrent with the district attorney’s announcement of a settlement agreement with Ripple Labs and XRP II in which the companies escaped the possibility of criminal charges and forfeited $450,000, whichh is being folded into the whole. Remedial steps are underway, including a three-year “look-back” to require suspicious activity reporting for prior suspicious transactions. The companies have also promised to employ external independent auditors to review their compliance with the BSA every two years, up to and including 2020.

As of 2015, Ripple is the second-largest cryptocurrency by market capitalization, after Bitcoin. On 18 March 2013, FinCEN released 'guidance' that required virtual currency exchangers and administrators to register as MSBs with it.