There is no ambiguity: crypto startups must follow U.S. anti-money-laundering (AML) laws or else suffer the consequences, said the nation’s top AML regulator.

Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN), warned the crypto industry Monday to take heed of the Bank Secrecy Act (BSA) and other AML regulations when setting up businesses – because his agency certainly will.

Blanco, who spoke at Georgetown University as part of the first day of DC Fintech Week, told moderator Chris Brummer that companies have no excuse for not knowing the law.

“What we tell everybody is if you’re going to innovate, you better make sure that you’re complying with your regulations prior to executing that innovation or prior to going to market,” Blanco said. “You better make sure that that happens because frankly … you don’t get to build it and then everybody comes around over it.”

He went on to add:

“You have to make sure that you comply with the law first and then you can execute and get to market. Otherwise that’s not happening … I’ll tell you if you can’t comply with your BSA, you’re going to have a problem … you must comply and we as a regulator, as the primary regulator and the administrator of the BSA, we will make sure that you do and you’re going to have a hard time if you don’t.”

FinCEN won’t accept that a company “can’t” comply with the law either, he said. Any firms which do not believe they are able to fulfill the requirements in the BSA should not come to market, Bianco said.

“That’s what our expectation is going to be moving forward,” he said.

Blanco’s comments come at a time when industry observers expect enforcement actions around money laundering, due in part to a recent joint statement FinCEN published with the Securities and Exchange Commission and Commodity Futures Trading Commission.

‘Exciting’ yet ‘scary’

Warnings aside, Blanco praised the idea of innovation, though he warned of potential national security risks throughout his speech.

“Some of it is really exciting,” he said. “The good is, wow, we can really protect society in many different ways or enjoy more job growth based on these kinds of inventions and ideas.”

On the other hand, it’s “scary” how some of these same new tools can be used by bad actors, he added.

“Like any innovation, you have to be careful because sometimes those people who show up when you’re innovating are the wrong people and the people who are trying to exploit it for the gaps that are there so you have to keep that in mind,” he warned.

These malicious actors are what inspired laws like the BSA, he said. Society would want to protect the elderly and other groups that are susceptible to cyber fraud and other digital crimes.

FinCEN is not anti-technology, Blanco later added. The agency is technology-neutral, and despite his warnings to the industry, he believes that tech should continue advancing – though he reiterated it should be developed responsibly.

“Innovation … must be responsible and it must be reasonable. You can’t just build a car that only goes 190 miles an hour and say ‘change the speed limit,’ it’s not going to work that way,” he said, concluding:

“Your car is going to have to adapt. Otherwise, it’s not coming on the road, bottom line, and that’s the message.”

Chris Brummer and Kenneth Blanco image by Nikhilesh De for CoinDesk