Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Upcoming SlideShare
What to Upload to SlideShare
Next
Download to read offline and view in fullscreen.

1

Share

Download to read offline

The Great Compliance Wall: How to Overcome the Number One Obstacle to Crypto Innovation

Download to read offline

My most complete presentation about regulatory compliance in the crypto space. The history of enforcement, and a glimpse into the possible future of even greater enforcement as the industry matures (and the targets get more numerous and attractive).

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all

The Great Compliance Wall: How to Overcome the Number One Obstacle to Crypto Innovation

  1. 1. THE GREAT [COMPLIANCE] WALL HOW TO OVERCOME THE NUMBER ONE OBSTACLE TO CRYPTO INNOVATION @JUANLLANOS BlockConf Digital, May 25, 2020
  2. 2. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  3. 3. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  4. 4. JUAN LLANOS COACH, MENTOR (PLUG & PLAY, FOUNDER INSTITUTE, FINNOVISTA, OPENTALENT), ANGEL INVESTOR AND ADVISOR AT CRYPTOCURRENCY AND TECHNOLOGY START-UPS (METAL, COINME, BINANCE, BITWAGE, MELOTIC, RIPIO, SKRY, ONE WORLD IDENTITY, OMEGA ONE, UPHOLD) ENTREPRENEUR-IN-RESIDENCE, FINTECH & REGTECH LEAD AT CONSENSYS UPHOLD’S (FORMERLY BITRESERVE) FIRST CHIEF COMPLIANCE OFFICER FORMER MEMBER OF THE BITCOIN FOUNDATION‘S REGULATORY AFFAIRS AND EDUCATION COMMITTEES. CO-CHAIR OF DATA’S AML WORKING GROUP, AND COALA GLOBAL’S REGULATORY OVERSIGHT WORKING GROUP, AND GDF’S AML WORKING GROUP PIONEER IN THE DEVELOPMENT OF BEST PRACTICES FOR THE CROSS-BORDER REMITTANCES INDUSTRY, AND IN AUTOMATION AND PRODUCTIZATION OF COMPLIANCE HELPED DEVELOP A PORTFOLIO OF INNOVATIVE RETAIL FINANCIAL SERVICES FOR IMMIGRANTS, INCLUDING MEXICO'S FIRST PREPAID DEBIT CARD AT UNIDOS FINANCIAL SERVICES IN 2008, WAS GRANTED PERMANENT RESIDENCE IN THE UNITED STATES BY REASON OF “EXTRAORDINARY ABILITY” IN THE FIELDS OF ANTI-MONEY LAUNDERING AND COUNTERING THE FINANCING OF TERRORISM @JuanLlanos
  5. 5. @JuanLlanos
  6. 6. @JuanLlanos
  7. 7. @JuanLlanos
  8. 8. @JuanLlanos
  9. 9. @JuanLlanos
  10. 10. ULTIMATE GOALS DE-RISK THE GLOBAL CRYPTO ECOSYSTEM BUILD BRIDGES TO MAINSTREAM ACCEPTANCE @JuanLlanos
  11. 11. THE CRYPTO ECONOMY WILL FAIL TO GAIN LEGITIMACY AND REACH ITS POTENTIAL UNLESS IT MEETS GLOBAL AML/CFT COMPLIANCE STANDARDS AND OTHER REGULATORY EXPECTATIONS. @JuanLlanos
  12. 12. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  13. 13. @JuanLlanos
  14. 14. $700K + REMEDIAL ACTIONS (2015) “Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) […] selling virtual currency and acting as an MSB [...] without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program;...failing to report suspicious activity related to several financial transactions.” $122M + CRIMINAL INDICTMENT (2017) “BTC-e lacked basic controls to prevent the use of its services for illicit purposes [...] failed to implement policies, procedures, and internal controls reasonably designed to prevent the MSB from facilitating money laundering [...] failed to report suspicious activity.” @JuanLlanos
  15. 15. AML/CFT/SANCTIONS PILLARS 1. COMPLIANCE OFFICER 2. RISK ASSESSMENT 3. POLICIES, PROCEDURES & CONTROLS 4. ONGOING TRAINING 5. INDEPENDENT REVIEW AND TESTING PPCs mustbe risk-based and effective KYC is just one of many AML COMPLIANCE IS BOUND TO FALL SHORT WHEN EXAMINERS START DOING THEIR JOB. @JuanLlanos
  16. 16. MONITORING AML PROGRAM REPORTINGREPORTING ONBOARDINGONBOARDING MONITORING AML PROGRAM REPORTING “LIGHT” KYC ONBOARDING ALONE IS INSUFFICIENT. IT’S A LIABILITY HIDING IN PLAIN SIGHT. TRUE KYC ONBOARDING MONITORING AML PROGRAM REPORTING HOLISTIC COMPLIANCE @JuanLlanos
  17. 17. EARLY-STAGE CRYPTO COMPANIES FOCUS EITHER ON KYC OR BLOCKCHAIN ANALYTICS. NEITHER IS SUFFICIENT TO COMPLY OR REDUCE FUDs. UNIMPEACHABLE COMPLIANCE REQUIRES END-TO-END LIFECYCLE MANAGEMENT & DEFENSIBLE EXECUTION. BEYOND ONBOARDING, IT’S ALL ABOUT ONGOING DEMONSTRABLE RECORDKEEPING & LIFECYCLE MANAGEMENT. @JuanLlanos
  18. 18. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  19. 19. @JuanLlanos
  20. 20. REGISTRATION vs LICENSING vs DESIGNATION @JuanLlanos
  21. 21. @JuanLlanos
  22. 22. VIRTUAL CURRENCY CRYPTO ASSETS DIGITAL ASSETS @JuanLlanos
  23. 23. @JuanLlanos
  24. 24. @JuanLlanos
  25. 25. @JuanLlanos
  26. 26. ASSET TYPE CURRENT US PRUDENTIAL REGULATOR ISSUANCE + MARKETING / ADMINISTRATION STORAGE / CUSTODY / SAFEKEEPING TRANSFER + CONVERSION CURRENCY States n/a Licensed MT for stablecoins Depositary Licensed MT SECURITY SEC Registration or exemption Qualified custodian NSE or ATS Transfer Agent COMMODITY DERIVATIVE (OR LEVERAGED / MARGINED CURRENCIES) CFTC Registration or exemption E.g., (Swap) Data Repositories Designated Contract Markets (e.g., SEFs, FCMs) @JuanLlanos
  27. 27. @JuanLlanos
  28. 28. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  29. 29. @JuanLlanos
  30. 30. ANTI-MONEY LAUNDERING/COUNTERING THE FINANCING OF TERRORISM (AML/CFT) IS ’NON-NEGOTIABLE.’ It impacts national security and strategic geopolitical interests. @JuanLlanos
  31. 31. LEGACY FINANCIAL INSTITUTIONS AND GOVERNMENTS ARE GENERALLY WARY OF EMERGING TECHNOLOGIES LIKE CRYPTO ASSETS & BLOCKCHAINS. They may pose real or perceived threats to both their existence and reputation. They are vulnerable to criminal abuse and incompatible with current regulation. UNITED STATES LAW ENFORCEMENT IS AGGRESSIVE IN ITS EXTRATERRITORIAL REACH AND INFLUENCE. Legacy institutions opt for eliminating risk rather than managing it, thus ‘killing two birds with one stone.’ @JuanLlanos
  32. 32. HOW DOES ENFORCEMENT WORK? DE JURE... DE FACTO... @JuanLlanos
  33. 33. @JuanLlanos
  34. 34. SIGNIFICANT FINANCIAL + REPUTATIONAL IMPACT $15B+ MONETARY PENALTIES SINCE 9/11 @JuanLlanos
  35. 35. @JuanLlanos
  36. 36. AML ENFORCEMENT HAS LED TO ”DE-RISKING.” BIT, CRYPTO AND TOKEN COMPANIES ARE FACING BIG CHALLENGES obtaining basic operational banking services, and becoming credible new players in the mainstream economy. @JuanLlanos
  37. 37. @JuanLlanos
  38. 38. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  39. 39. @JuanLlanos
  40. 40. BACKGROUND EARLY WARNINGS REGULATION PRIMER THE HEAVIEST SWORD STRATEGIC CHOICES PREDICTIONS @JuanLlanos
  41. 41. @JuanLlanos
  42. 42. @JuanLlanos
  43. 43. @JuanLlanos
  44. 44. @JuanLlanos
  45. 45. @JuanLlanos
  46. 46. AML ENFORCEMENT WILL NOT SUBSIDE. IT IS BOUND TO BE STEPPED UP AS THE CRYPTO INDUSTRY MATURES. @JuanLlanos
  47. 47. @JuanLlanos
  48. 48. @JuanLlanos
  49. 49. THE TOKENIZATION OF ALL THINGS WILL LEAD TO ALL THINGS BEING SUBJECT TO AML COMPLIANCE. @JuanLlanos
  50. 50. @JuanLlanos THE NEXT WAR OF THE WORLDS
  51. 51. IT’S TIME TO BUILD @JuanLlanos
  52. 52. @JuanLlanos
  53. 53. @JuanLlanos
  54. 54. COMPLIANCE RISK MANAGEMENT IS AN OPERATIONAL PROBLEM, NOT A LEGAL ONE, BETTER SOLVED WITH TECHNOLOGY AND PRODUCT DESIGN. RISK-ADJUSTED GROWTH CAN ONLY BE ENABLED BY DESIGNING AND BUILDING A SCALABLE INFRASTRUCTURE @JuanLlanos
  55. 55. @JuanLlanos
  56. 56. JUST DO IT! YOU CAN’T SCORE FROM THE BLEACHERS. @JuanLlanos
  57. 57. juanllanos.com @JuanLlanos
  • AndrewBrown71

    May. 31, 2020

My most complete presentation about regulatory compliance in the crypto space. The history of enforcement, and a glimpse into the possible future of even greater enforcement as the industry matures (and the targets get more numerous and attractive).

Views

Total views

1,052

On Slideshare

0

From embeds

0

Number of embeds

259

Actions

Downloads

6

Shares

0

Comments

0

Likes

1

×