Use Cases
Crypto Asset Providers

Crypto Asset Providers

The anonymity of virtual currency conceals the source and ownership of funds, allowing criminal gains to be laundered through cryptocurrencies and custodian wallets. The virtual currency remittance system is vulnerable to the risks of terrorism financing (TF).
Crypto asset service providers or virtual asset service providers are natural or legal persons that offer the following services:
Exchange services between fiat and virtual assets
Transfers of virtual assets
Custodian wallet providers offering safekeeping and administration of virtual assets
Crypto assets are easily accessible, transferable and exchangeable from almost anywhere around the world. Crypto asset providers are exposed to criminals that may use cryptocurrency mixers to conceal the proceeds of illegal activities before transferring them into a regulated crypto asset provider. Additionally, the use of decentralized exchanges can make it difficult to trace funds that may be associated with criminal activity.
The crypto asset industry however, is not effectively regulated like traditional financial institutions. In some countries there are no specific regulations in place to address money laundering in the crypto industry. In others, regulations have been implemented but as not as comprehensive as those in place for traditional financial institutions. The lack of regulation creates opportunities for criminals to launder money.

Regulatory Compliance

Crypto asset service providers are “obliged entities” and they must comply with anti-money laundering (AML) rules. As a result, they must have a robust AML programme in place, which includes:
Systems in place to detect and report suspicious transactions to the appropriate authorities
Risk Assessment to understand the money laundering and terrorism financing risks they face
Keeping records of transactions and customer information for as long as it is required by the national law in an easy and retrievable way when requested by authorities
Customer Due Diligence (CDD) which includes identification and verification of the client and the beneficial owner, understanding the nature and purpose of the business relationship and ongoing monitoring
Providing training to their staff on AML regulations and the internal controls including CDD measures and identification and reporting of suspicious transactions

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