This document summarizes a presentation given at INSIDE BITCOINS Las Vegas on driving KYC and AML compliance for digital currencies. It discusses how traditional compliance processes may not be effective or required for digital currencies. It also explores how bitcoin can help disrupt existing compliance approaches through decentralized identity solutions and distributed compliance networks. The presentation evaluates different compliance models and controls that digital currency companies are implementing, and argues for a shared data network approach to onboarding and compliance that is adapted for the unique challenges of decentralized systems.

1. 1Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Driving KYC and AML Compliance for Digital Currencies
OCTOBER, 2014

2. 2Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Introductions
Dmitri Korablev
VP Engineering, Co-Founder, Strevus
@korabli
• Over 20 years experience in SaaS, enterprise data and process
management, and financial services
• Former VP and GM of Product Information Management at Informatica
“Simple things should be
simple and complex things
should be possible.”
Alan Kay
Compliance Made Easy.

3. 3Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014

4. 4Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Are the traditional KYC / AML processes
effective?
Are they required?
How can Bitcoin help disrupt the status quo in
KYC and other compliance areas?
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5. 5Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Digital Regulations & Government Affairs
UNITED KINGDOM | The authority now says it wants to ensure “positive
developments” like bitcoin are supported by the nation’s regulatory
environment. - UK FCA CEO, Martin Wheatley
CHINA | Consumers and businesses should take note of the broader risks
that dealing in virtual currencies entails and should exercise the necessary
caution. - MAS Deputy MD, Ong Chong Tee
HONG KONG | Existing laws in Hong Kong already cover acts of fraud and
money laundering involving “virtual commodities”
- Hong Kong Monetary Authority
UNITED STATES | Any financial institution could be exploited for money
laundering purposes. Therefore, all financial institutions must put controls
in place to deal with these threats.
- US Department of Treasury, David S. Cohen
PERMISSIVE
CONTENTIOUS
HOSTILE
UNKNOWN
Taxation
Innovation Jobs
Monetary Policy
Financial CrimeCourts
Political Agendas
Consumer Protection
AMLKYC ATF

6. 6Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
WHAT: Unstable and inconsistent digital
currency regulation creates confusion
on processes and standard
WHAT: Deal with unique challenges of
the Decentralized and Open system
and the built-in privacy mechanism
Bitcoin Compliance Today
PROPRIETARY AND CONFIDENTIAL
HOW: Evaluate Digital Currencies in
the context of the existing legislation
WHO/WHEN: Unclear implementation
timelines and regulatory boundaries
HOW: Allocate budget, implement the
minimum processes, focus on
automation and efficiency
WHEN: Many companies are
implementing the policies proactively to
gain competitive advantage
REGULATORS MARKET

7. 7Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
•Owner & Responsible Officer & Budget
•Documented Processes
•Strong Privacy Policy
•3rd party audits
•Negative news monitoring
•Transaction monitoring
•Define and monitor “abnormal use” patterns
•Understand the SAR process ahead of time
•Engage with the regulators
•Educate, but stay grounded in reality
•Study the existing law and offer alternatives
•Define CDD and EDD
•Automate CDD (consumer/retail) - ID verification,
Screening (PEP, Sanctions, Negative news)
•Define Risk levels and apply Enhanced DD screening
•Set up periodic reviews
Traditional KYC Model
COMPLIANCE ORGANIZATION
& PROCESSES
KYC PROGRAM
ENGAGE WITH THE REGULATORS
AND COMMUNITY
RISK AND MONITORING
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8. 8Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
FLAT CUSTODIAN
• Exchange conduct
KYC/AML-DD, collaborate
with the Custodial bank
• Traders must go through
the KYC/AML-DD process
at all exchanges that they
trade at.
• Exchange members may
have to conduct KYC/AML-
DD on partners.
Digital Currency Exchange Ecosystem

9. 9Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Distributed eco system needs distributed identity
SHARED DATA NETWORK
Re-usable Onboarding Compliance Data
Portable Profile Certificate
Crowd-based vetting
Network based suspicious activity
reporting
Community Based Client Risk Profile
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10. 10Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
SHARING is controlled by clients with
information and entitlements stored
on the Blockchain
STRUCTURE OF DATA and
documentation can be customized
without central intervention
ENABLES COMMUINTY FEEDBACK,
greater visibility and reputation
building
Enables WIDER COLLABORATION
across and within organizational
boundaries
P2P Compliance and Digital Identity

11. 11Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014
Want to learn more about how Strevus can help?
WILL GROW WITH YOUR
ORGANIZATION through a
platform that supports immediate
CDD needs today and can adapt to
support EDD needs in the future
AFFORDABLE to purchase,
protects against future
costs
EASY TO INTEGRATE
Minimal Demand on IT
and Ops Resources
Strevus provides a SINGLE SOLUTION FOR ONBOARDING AND COMPLIANCE right-sized
for today’s digital currency environment.
Visit Strevus at Booth # 207. Follow us @Strevus