AML/KYC for Crypto

Cryptocurrency operations have become incredibly popular, captivating users worldwide with convenience, speed, and anonymity. However, this confidentiality has opened doors to criminal activities, including money laundering. To prevent the risks of fraud and activities related to money laundering or financing terrorism, one must comply with Anti-Money Laundering measures in the crypto industry. Licensed crypto companies must introduce AML (Anti-Money Laundering) and KYC (Know Your Customer) policies, as well as be responsible for AML compliance for cryptocurrency, conducting mandatory checks, and tracking suspicious activity on the platform.

About AML for Crypto

AML procedures are necessary for financial companies providing cryptocurrency services to detect and prevent any attempts at laundering illegally obtained funds or financing terrorism. 

The Financial Action Task Force on Money Laundering, an intergovernmental organization, has developed international AML standards applicable worldwide. Within the EU, the Fifth and Sixth Anti-Money Laundering Directives (5AMLD EU and 6AMLD EU) are also in force, including in the realm of digital crimes and cryptocurrencies.

Even before the launch of a crypto project, it is essential to develop internal AML policies and implement them into the website’s operations. These policies establish rules for platform protection, aiding in customer identification and assessing potential risks of financial crimes during cryptocurrency transactions.

SBSB experts recommend crypto projects not only to develop and implement policies but also to conduct regular AML audits. These measures will not only prevent the platform from turning into a money laundering hub but also demonstrate to regulatory and law enforcement agencies, partners, banks, and users that you conduct transparent activities in strict compliance with all legislative requirements and ensure AML compliance cryptocurrency.

AML Audit

An Anti-Money Laundering audit is typically conducted by an independent expert to verify crypto AML compliance, identify and minimize security risks associated with money laundering and terrorism financing within the organization’s system.

We also offer complex AML solutions: 

• AML consulting;
• AML officer services (project-based or upon request);
• Preparation for regulatory AML checks.

Stages of Conducting an AML Audit

The SBSB team conducts audits of crypto projects, develops and assists in implementing AML policies, enhances the internal control system to ensure business operations align with regulatory requirements and legislation. 

AML audits should adhere to international standards like the FATF 40 Recommendations. The procedure must cover all aspects of a company’s AML program, including:

• AML policies and procedures;
• risk management;
• employee training;
• reporting and monitoring. 

Professional recommendations help crypto companies eliminate weaknesses and potential threats, improve internal policies, compliance procedures, and the internal control system, thereby preventing security risks to the platform.

Why Conduct an AML Audit

An AML audit allows for assessing the transparency and legality of a crypto company’s activities, its compliance with AML rules and requirements, as well as evaluating the effectiveness of internal controls, customer verification, and operations monitoring systems, subsequently enhancing the AML system.

Timeline for Conducting an AML Audit

The duration of an audit depends on several factors: the company’s size, the number of clients, and the range of services offered by the company.

About KYC for Crypto

Know Your Customer requirements for cryptocurrency are one of the AML tools developed to identify and verify clients before providing services. This procedure complements AML and, in combination, helps prevent and detect illegal money laundering operations.

KYC procedures for cryptocurrency transactions commonly consist of three points

1. Client Identification and Verification allows for the verification of whether a new user is indeed who they claim to be. Cryptocurrency platforms may request the following information:

• full name;
• date of birth;
• identity documents — passport or driver’s license;
• current address.

2. Comprehensive client verification helps service providers with assessing clients to determine fraud risks and protect their business from financial crimes. After obtaining client information, organizations can verify the provided documents and income sources, as well as assess the risks associated with potential cooperation or the client’s use of the platform for transactions.

3. Continuous Monitoring of Financial Operations allows for the identification of potentially risky accounts and transactions, signs of criminal activity, and enables reporting to state authorities.

Regulatory compliance for AML in the crypto sector and compliance with KYC policies have several advantages for a company. First and foremost, it legitimizes activities while complying with regulatory requirements, enhancing user and partner trust. Non-compliance could lead to legal repercussions, potentially resulting in commercial activity bans or organizational liquidation through court decisions.

Why Choose SBSB Lawyers for Conducting an AML Audit

Since 2013, SBSB lawyers have been working with crypto projects, offering clients comprehensive legal services, including AML audits. This allows for timely problem identification and risk detection, which might lead to issues with regulatory and law enforcement agencies. Following the necessary procedures, SBSB lawyers provide a list of recommendations, enabling you to improve your company’s operations and minimize the risks of being involved in money laundering activities.

With over 10 years of experience in the crypto sphere and a portfolio showcasing numerous successful crypto project launches, licensing preparations, and dealings with regulators in various jurisdictions worldwide, SBSB experts develop individual AML and KYC policies for each company. They propose secure solutions and assist in implementing all necessary changes in business processes to align your company with the current AML/KYC legislative norms.