By: Mike Castiglione, Director of Regulatory Affairs, Digital Assets, Eventus
Only 15 percent of cryptoasset applicants have gained approval under the UK Financial Conduct Authority (FCA) anti-money laundering (AML) and countering-terrorist finance regime, according to a recent FCA notice. To assist applicants, the FCA offers guidelines about what constitutes good and bad applications to satisfy the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR).
This guidance reinforces the importance of qualified compliance officers, advance planning, proper business processes, and use of the right technology. FCA emphasized:
- The appointment of a Money Laundering Reporting Officer (MLRO) with sufficient skills, experience, and access to information. The FCA said it would refuse applications without a fit MLRO.
- A business plan that describes compliance oversight, risk mitigation, and financial controls.
- A business wide risk assessment (BWRA) and policies, systems and controls in place to appropriately manage and mitigate the risks identified.
- FCA will reject proposals with an “underdeveloped AML framework or weak governance structure,” such as one without risk-scoring of customers.
- Transaction monitoring and blockchain analysis is a must. The applicant must show these systems are adequate for the firm’s size and complexity, and are used with sufficient resources.
- The firm must show “adequate and current sanctions-specific controls” for its cryptoassets business.
Validus in Practice (ViP): Validus AML is a newly-launched SaaS AML platform that combines transaction monitoring, customer behavior monitoring, and sanctions monitoring in a single scalable and easily configurable platform. It builds on the success of Validus Trade Surveillance, backed by the same Eventus team known for helping customers as they navigate through regulatory licensing requirements.
Validus AML, designed for experienced AML officers, gives compliance teams access to the right information to fulfill their compliance oversight plan. Notably it supports the aggregation and monitoring of trading data together with transaction and customer data to provide a complete and comprehensive view of all relevant customer activity. Importantly, suspicious or unusual trading activity may be an indicator of an attempt to disguise the transformation of illicit funds as part of money laundering.
Like the FCA, Eventus has recommended that clients perform their own risk assessment. We engage with Validus clients to adjust parameters to fit the outcome of that assessment and specific company, market, and regulatory needs.
About Eventus
Eventus is a leading global provider of multi-asset class trade surveillance and market risk solutions. Its powerful, award-winning Validus platform is easy to deploy, customize and operate across equities, options, futures, foreign exchange (FX), fixed income and digital asset markets. Validus is proven in the most complex, high-volume and real-time environments of tier-1 banks, broker-dealers, futures commission merchants (FCMs), proprietary trading groups, market centers, buy-side institutions, energy and commodity trading firms, and regulators. The company’s rapidly growing client base relies on Validus and Eventus’ responsive support and product development teams to overcome its most pressing regulatory challenges. For more, visit www.eventus.com.