Cryptocurrency Exchange FCC Review

Challenge

In response to a financial crime regulator, a major cryptocurrency organization operating in multiple jurisdictions engaged FRA’s assistance to address concerns about the effectiveness of its anti-financial crime framework, covering its AML and CTF arrangements and Sanctions compliance program.  We were to assess those arrangements, provide suggested enhancements, and support the organization in its interactions with the regulator on its program of work to address those issues. 

Action

Our team reviewed the cryptocurrency exchange’s risk assessment program, it’s customer due diligence (CDD) / enhanced customer due diligence (ECDD) arrangements and other aspects of its financial crime risk management framework. The team looked for divergence with regulator’s concerns and identified specific areas for improvement, leveraging FRA’s extensive experience of reviewing and advising on the appropriateness and effectiveness of such arrangements in line with international best practice. This involved a detailed review of the exchange’s AML/CTF policies, transaction monitoring procedures, and significant enhancements to their governance and oversight approach. Given that direct face to face interaction with customers was limited, FRA also identified areas for enhancement to the exchange’s customer and transaction monitoring activities.

Result

Following the review of the exchange’s policies and procedures, FRA guidance helped the organization significantly enhance their AML/CTF and Sanctions compliance risk assessment framework and operational arrangements, including their governance and oversight activities to minimize and respond to both operational and regulatory risks. As a result of the engagement, the organization had a tailored list of operationally relevant recommendations and a response plan to assist them with addressing the regulator’s concerns.