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Blockchain Compliance:
Old Challenges, New Technology
Presented by:
Amber D. Scott, Founder & Chief AML Ninja
&
Colleen P. Waddell, U.S. Managing Director
Outlier Solutions
Hefty Disclaimers
• Amber is not an attorney, and even though Colleen is, nothing that we say should be interpreted as legal advice, or as tax advice.
• We do not represent any government or government agency. Nothing that we say should be interpreted as an official government statement or position.
• If you have questions about a particular situation or company that involve people’s names or confidential information, come and chat us up after the presentation instead of asking in a public forum.
Circular 230: This presentation is provided solely for the purpose of enhancing knowledge on tax matters. It does not provide tax
advice to any taxpayer because it does not take into account any specific taxpayer’s facts and circumstances. These slides are for
education purposes only and are not intended, and should not be relied upon, as accounting or legal advice.
Acme Corp Disclaimers…
Acme Corp is a work of
fiction. Although I expect
that some of the content
presented will seem a bit
familiar, this is not a story
about you, you clients, or
your companies…
WTF is Compliance Anyway?
• There are many flavours:
– Anti Money Laundering (AML) & Counter Terrorist Financing (CTF),
– Banking, Investment & Payments,
– Privacy,
– Consumer Protection & Advertising, and
– Many more…
The Most Common Question Startups
Ask Me…
Me
ets
Re
gula
tory
Re
qu
ire
me
nts
N
o
Yes
Effectively Mitigates Risk
No Yes
Ideal Solution Suboptimal – Risk Issues Are Likely
Suboptimal – Compliance Issues Are Likely
Money Pit
It’s All About Risk
• Risk isn’t bad – but it
needs to be managed.
• When you have auditors
and regulators, you have
to prove it.
• Sometimes your bank
will ask for proof too
(even if you’re not
regulated).
What Does Acme Corp Need?
• Acme Corp. is hoping for VC money, but right now we’re bootstrapped.
• The founders are using their savings to fund the company, and also doing most of the work.
• We don’t want to spend money if we don’t have to… But we’re not sure how we know what we need....
• And our model will probably change... Maybe a few times along the way...
• Oh yeah, and we’re also global so our programs can’t just work in Canada, they have to work everywhere – the U.S., the U.K., Japan, Egypt, Brazil...
Acme Around The World
• Technology is global and
instant…
BUT
• Laws and regulations are
local and slow…
The Compliance Officer
• You do not need to hire many (or even one) additional resources… but the person that is in the role should understand what’s happenning and stay up to date.
• Your advisors need to “speak the language” (companies are global, but people are not).
AML & CTF
• If you’re not sure if you’re regulated, check and ask.
• Even if you’re not regulated, this can be an issue…
• Your bank might want you to act like you’re regulated, even if you’re not.
Banking, Investment & Payments
• What you’re doing matters,
and the words that you use
matter too…
• Some words are
dangerous:
– Bank,
– Deposit,
– Investment,
– Risk Free / Low Risk,
– Bank / Regulator Approved.
Privacy
• Do you collect personal
information (PI)?
– Only collect what you need.
– Explain why you’re
collecting it.
– Get clear consent to use it.
– Give people a choice.
– Make opting out easy.
– Protect it… but also have a
breach process.
Consumer Protection & Advertising
• About 90% of these
rules can be summed up
in one question:
– Is it true?
• The other 10% will be
very specific to industry
and region, with some
commonalities.
FATCA, CRS & What’s Coming Next
• Tax residency and reporting can be confusing.
• The model matters when you are deciding if a company is a reporting and/or withholding entity.
• Some tax regulators have no sense of humour…
Stop: Pivot Time!
• Business models change.
Should compliance
always change too?
– Pre-Launch
– At Launch
– Ever?
Uber Didn’t Care – Why Should Acme?
• Scope
– Who would you fight?
– Where would you fight?
– Is it one fight or many
fights?
• Scale
– How big is the fight?
• Risk
– Is the fight winnable?
