Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC....

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Digital Assets, Cryptocrime and Compliance: Trends and Evolution Session 3

Transcript of Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC....

Page 1: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Digital Assets, Cryptocrime and Compliance:Trends and Evolution

Session 3

Page 2: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

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• Complete fun and exciting missions to earn points

• Multiple winners announced every day…grand prizes on Friday

• Checkout the game tracker to see who’s in the lead and photos of completed missions

• Download GooseChase appGame Code: ACFCS

Scavenger Hunt – Let’s Go on a Goose Chase

Page 3: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Exhibit Booths – Take a Virtual Walk

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• Visit the exhibitors and enter the booths by clicking on their name (not logo)

• Gain access to 50+ free downloadable resources

• Learn about their solutions by attending a Product Demo session (on agenda)

Page 4: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

More Resources – Yes, I Want More!

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• Exclusive takeaway tools including presentations, recordings and more resources

• Go to your profile in Grip and scroll down to the ‘Exclusive Access’ field

• Click YES to gain access to the toolkit and receive sponsor communications

Page 5: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Go Social – Make Meaningful Connections

Chat privately and schedule video meetings on Grip

View your recommendations

Continue the conversation on social media

#fincrimevirtualweek

Page 6: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Meet the Experts

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Jeff Horowitz

Chief Compliance Officer

Coinbase

Page 7: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Meet the Experts

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Jonathan Levin

Co-Founder

Chainalysis

Page 8: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Meet the Experts

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Lana Schwartzmann

Chief Compliance Officer

Paxful

Page 9: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Meet the Experts

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Jon Fishman

Senior Policy Advisor, Office of Terrorist Financing and Financial Crimes

US Department of the Treasury

Page 10: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

• State of digital asset usage

• Evasion techniques and criminal trends

• Twitter hack – Case study

• State of compliance – Evolution, progress, challenges

• Collaboration with regulators and “legacy” finance

The Agenda – What’s On Tap

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Proprietary and Confidential

Why financial institutions will adopt cryptocurrency

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Future proof

the business

20%

Revenue

opportunity

18%

Market leadership

18%

Client demand

44%

Page 12: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Proprietary and Confidential

62% of bitcoin is already used as a store of value

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Lost

3.7m BTC

Trading

3.4m BTC

Investment

11.4m BTC

To be mined

2.4m BTC

Page 13: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Proprietary and Confidential

$1.4bn of bitcoin flowed into exchanges on Monday 27 July as price went from $9.9k to $11k

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Inflows previously spiked when bitcoin briefly went over $10k

Unusual Sunday inflows ahead of large price move

Page 14: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Proprietary and Confidential

Most bitcoin flows within the Eastern Asia region, but 37% of flows cross regional borders

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Page 15: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Proprietary and Confidential

~$10m is laundered per day, 47% of which is from darknet markets to exchanges

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Criminal Trends:

Evolution of Evasion

• Crypto as one of many channels, not the end state or goal of bad actors

• “Off-chain” transactions and lack of visibility – Lightning Network

• Sanctions risks

• Lazarus Group and North Korea crypto-hacking

• Iran’s national crypto mining strategy

• Nexus to financial sector

• Other new typologies and threats

Page 17: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Twitter Hack – Anatomy of a Scam

Page 18: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Proprietary and Confidential

Twitter hack solved in under 16 days

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Page 19: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

State of Compliance: Evolution, Progress, Challenges

• Findings from the 12 Month Review of Revised FATF Standards – Virtual Assets and VASPs

• Travel Rule – Positive steps, ongoing challenges

• Reasons to be optimistic?

• Regulatory fit with digital asset space – Square peg, round hole?

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Polling Question

Where does your institution stand on providing financial services to VASPs?

• We are currently providing services to VASPs

• We’re actively exploring and planning for this

• We’re interested but nothing in progress at this time

• We’re not providing services and not planning to

• We won’t touch VASPs with a ten-foot pole• Not sure

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• 314(b) information-sharing with VASPS and banks – Tips and initiatives

• Relationship with U.S. regulators:• Collaborative vs. adversarial – Any lessons or

takeaways for traditional financial services?

• Appetite for innovation

• Likelihood for further regulation in the near future?

Cross-Sector Collaboration – The VASP Experience

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• Areas of risk that banks and others may (or may not) know about – Where and how does crypto hit your institution?

• Who’s already dipping their toes in the water – or jumped in?

• Due diligence tips for those considering VASP clients/services to VASPs?

Advice for the VASP-Curious

Page 23: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

Questions?

Page 24: Session 3 - acfcs.org...3.7m BTC Trading 3.4m BTC Investment 11.4m BTC To be mined 2.4m BTC. Proprietary and Confidential $1.4bn of bitcoin flowed into exchanges on Monday 27 July

THANK YOU!

Next session:

Crypto and Coffee

12:45 PM ET