In this deck I present my point of view on how to approach the inevitability of regulation, and how to build a risk and compliance program the smart way. PART 1 provides a historical overview of AML regulation and explains why and how value transfer systems are regulated. PART 2 deals with the main risk areas facing non-bank financial institutions, how to identify the risks and how to prepare and present a risk assessment to regulators and bankers. PART 3 is about designing a program the smart way, i.e., with an engineering mindset. It also provides an introduction to suspicious activity detection via transaction monitoring and behavioral data analysis. PART 4 includes a few words of unsolicited advice (contrarian, of course) that I've followed myself to build several companies, obtain and maintain hundreds of bank accounts and pass dozens of examinations in multiple countries over the past 13 years. BOTTOM LINE: Regulation is inevitable and here to stay. Focusing on the spirit of the law (policy goals) is (should be) more important than focusing on the letter. Unfortunately, regulators and companies alike today focus on the formal aspects and the letter of the law. The result? A witch hunt for needles in the haystack after which only lawyers win. In the 21st century, compliance and risk should be done by engineers on both the business and government side.
1. Bitcoin & AML Regulation:
Strategies for
Successful Compliance &
Government Relations
by @Juan Llanos
Las Vegas InsideBitcoins Conference
Las Vegas, October 5, 2014
6. Financial Action Task Force
Groupe d’Action Financière Internationale
(FATF-GAFI )
Independent inter-governmental body
Develops and promotes policies to protect the
global financial system against money laundering
and terrorist financing
FAFT recommendations
define criminal justice and regulatory measures that
should be implemented to counter this problem
are recognized as the global anti-money
laundering and counter-terrorist financing standard
(AML/CFT)
7. Financial Action Task Force
Groupe d’Action Financière Internationale
(FATF-GAFI )
Special Recommendation VI
Each country should take measures to ensure that
persons or legal entities, including agents, that
provide a service for the transmission of money
or value, including transmission through an informal
money or value transfer system or network, should be
licensed or registered and subject to all the FATF
Recommendations that apply to banks and non-bank
financial institutions. Each country should ensure that
persons or legal entities that carry out this service
illegally are subject to administrative, civil or
criminal sanctions