1 Presented @ INSIDE BITCOINS Las Vegas -‐ October 7, 2014
ConducBng KYC and AML Compliance for Digital Currencies OCTOBER, 2014
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IntroducBons
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 InformaBon Management at InformaBca
“Simple things should be simple and complex things should be possible.”
Alan Kay
Compliance Made Easy.
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Are the tradi?onal KYC / AML processes effec?ve?
Are they required?
How can Bitcoin help disrupt the status quo in KYC and other compliance areas?
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Digital RegulaBons & Government Affairs
UNITED KINGDOM | The authority now says it wants to ensure “posiBve developments” like bitcoin are supported by the naBon’s regulatory environment. -‐ UK FCA CEO, Mar.n Wheatley CHINA | Consumers and businesses should take note of the broader risks that dealing in virtual currencies entails and should exercise the necessary cauBon. -‐ MAS Deputy MD, Ong Chong Tee HONG KONG | ExisBng laws in Hong Kong already cover acts of fraud and money laundering involving “virtual commodiBes” -‐ Hong Kong Monetary Authority UNITED STATES | Any financial insBtuBon could be exploited for money laundering purposes. Therefore, all financial insBtuBons must put controls in place to deal with these threats. -‐ US Department of Treasury, David S. Cohen
PERMISSIVE CONTENTIOUS
HOSTILE UNKNOWN
TAXATION Innova?on Jobs
Monetary Policy
Financial Crime Courts Poli?cal Agendas
Consumer Protection AML KYC ATF
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WHAT: Unstable and inconsistent digital currency regulaBon 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 exisBng legislaBon
WHO/WHEN: Unclear implementaBon Bmelines and regulatory boundaries
HOW: Allocate budget, implement the minimum processes, focus on automaBon and efficiency
WHEN: Many companies are implemenBng the policies proacBvely to gain compeBBve advantage
REGULATORS MARKET
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• Owner & Responsible Officer & Budget • Documented Processes • Strong Privacy Policy • 3rd party audits
• NegaBve news monitoring • TransacBon monitoring • Define and monitor “abnormal use” paferns • Understand the SAR process ahead of Bme
• Engage with the regulators • Educate, but stay grounded in reality • Study the exisBng law and offer alternaBves
• Define CDD and EDD • Automate CDD (consumer/retail) -‐ ID verificaBon, Screening (PEP, SancBons, NegaBve news) • Define Risk levels and apply Enhanced DD screening • Set up periodic reviews
TradiBonal 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
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Distributed eco system needs distributed idenBty
SHARED DATA NETWORK
Re-‐usable Onboarding Compliance Data
Portable Profile CerBficate
Crowd-‐based velng
Network based suspicious acBvity reporBng
Community Based Client Risk Profile
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SHARING is controlled by clients with informaBon and enBtlements stored on the Blockchain STRUCTURE OF DATA and documentaBon can be customized without central intervenBon ENABLES COMMUINTY FEEDBACK, greater visibility and reputaBon building Enables WIDER COLLABORATION across and within organizaBonal boundaries
P2P Compliance and Digital IdenBty
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Want to learn more about how Strevus can help?
WILL GROW WITH YOUR ORGANIZATION through a plamorm 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