Cryptocurrencies are becoming ever-popular these days. As much as they show potential for improving markets and supply chains, they have also been used for purposes like money laundering, theft, sale of illegal goods, and other crimes. With attempts such as an AML program or CTF regulations, governing bodies try to curb such crimes and their funding. Especially for crypto operators, AML-compliant policies are of the utmost importance for best practices.
5 Factors for a Successful Crypto AML/CTF Program
1. Conducting Comprehensive Risk assessments
With proper risk assessment and KYC procedure in place, you have a solid way to identify the AML/CTF threats your crypto firm faces. Such plans can be tailored to each firm’s selection of financial services. Risk assessments should start from guidelines on proper onboarding processes and should extend to tracing the flow of money as well as anticipating regulators’ expectations. With regular risk assessments, a crypto firm can keep a check on suspicious activity and fraudulent accounts.
2. Getting Familiarised With Typologies
When it comes to blockchain technology, firms need to watch for every challenge starting from market volatility to account takeovers. Without the necessary knowledge about each niche, it is almost impossible to design an AML program that fits. For crypto firms, payment using darknet crypto assets, dusting, layering, and account takeovers are a few key typologies to look out for.
3. Managing Stakeholders
Stakeholders may often feel that complying with regulations can adversely affect the company’s bottom line. However, this does not mean that a firm can remain in business, especially when it comes to an industry as volatile as crypto, without proper policies and licences. Also, refusing to comply with regulations can cause loss of authorisation and build a bad reputation for the firm.
This is why when the executives decide to forego regulations, other members of the firm need to educate the internal and external stakeholders. Regulators should be given equal importance in a firm and a constant channel of communication should be open with them.
4. Hiring the Right People
Maybe it is inviting to hire staff who already work at another crypto firm. While experience is vital in a field such as crypto, broadening the skill set possessed by your staff can prove to be highly beneficial. With personnel who have an education and experience in law, policymaking, tech support, and traditional finance, you can curate an eclectic but functional group. Since most of these skills are transferable and complementary, the firm can yield even more results with such hiring practices.
5. Picking the Right Technology
After designing the best possible AML/CTF plans, implementing them requires state-of-the-art technology. Automating onboarding and identity verification is one of the most important steps involved here. By employing bots to carry out regular screening and monitoring for suspicious activity, a wide range of malpractices can be averted.
Keeping track of the transactions is also highly practical in maintaining AML-compliant functioning. Having the best security system is also a crucial factor because data breaches often cause the most problems with crypto operators.
Why Should You Implement an AML-/CTF-compliant Policy?
Fintech companies have always come under fire for playing a role in fraudulent and illegal transactions. Curbing such activity means the crypto industry can become more stable and reliable. With this goal, the industry is promoting organisations with effective AML/CTF compliance policies and there is no reason why your firm should fall short.
