WHY DO DIGITAL CURRENCY EXCHANGES HAVE AML/CTF OBLIGATIONS?
WHAT SERVICES ARE COVERED BY AML/CTF OBLIGATIONS?
WHAT ARE THE ML/TF RISKS FACED BY DIGITAL CURRENCY EXCHANGES?
WHAT IS A RISK-BASED AML/CTF REGIME?
HOW CAN CUSTOS ADVISORY HELP?
Digital currency can mean a digital representation of either virtual currency or e-money and thus is often used interchangeably with the term “virtual currency”.
Decentralised, math-based virtual currencies have attracted increasing attention from an AML/CTF perspective because digital currencies are considered by some to be the future for payment systems.
Digital currencies may also provide a powerful tool for criminals, terrorist financiers and other sanctions evaders to move and store illicit funds, out of the reach of law enforcement and other authorities.
The Money Laundering and Terrorist Financing (ML/TF) risks associated with the digital currency sector include:
Convertible virtual currencies that can be exchanged for real money or other virtual currencies
Greater possible anonymity than traditional non-cash payment methods
Virtual currency systems can be traded on the Internet, and are generally characterised by non-face-to-face customer relationships
Permit anonymous funding (cash funding or third-party funding through virtual exchanges that do not properly identify the funding source)
Permit anonymous transfers, if sender and recipient are not adequately identified
Digital currency exchanges captured by the AML/CTF obligations must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures. This is a critical first step in complying with the AML/CTF Act and Rules.
Digital currency exchanges captured by the AML/CTF obligations are those providing services to exchange (buy and sell) digital currencies for FIAT currencies
Fiat currency is legal tender whose value is backed by the government that issued it. The Austrian dollar is a fiat currency.
The provision of ‘wallet’ services that hold digital currencies for customers is also captured by the AML/CTF Act. However, digital currency to digital currency exchange is currently excluded.
The AML/CTF regime is risk-based, which means that your responses to the AML/CTF obligations placed upon you should be risk-based.
A risk-based AML/CTF regime requires that you understand and address the Money Laundering and Terrorism Financing (ML/TF) risks associated with the digital currency services you offer.
You must then design, implement and maintain systems, procedures and controls that are proportionate to your ML/TF risks.
With over 50 years of expert knowledge and real world experience our AML/CTF compliance solutions will to help you navigate your legal and regulatory requirements so that your business complies with its AML/CTF obligations in the fastest and most cost-effective way.
Costos has a range of AML/CTF solutions to support your business in becoming AML/CTF compliant and maintaining compliance.
Our services and solutions allow you to tailor support based on your capacity, experience and budget.