Compliance and KYC for digital currencies

1Presented @ INSIDE BITCOINS Las Vegas - October 7, 2014

Driving KYC and AML Compliance for Digital Currencies OCTOBER, 2014


Introductions

Dmitri KorablevVP 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.


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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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

TaxationInnovation Jobs

Monetary Policy

Financial CrimeCourtsPolitical Agendas

Consumer Protection

AMLKYC ATF


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


• 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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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


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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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


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

Compliance and KYC for digital currencies

Economy & Finance

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