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Digital Assets, Cryptocrime and Compliance:Trends and Evolution
Session 3
2
• 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
Exhibit Booths – Take a Virtual Walk
3
• 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)
More Resources – Yes, I Want More!
4
• 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
Go Social – Make Meaningful Connections
Chat privately and schedule video meetings on Grip
View your recommendations
Continue the conversation on social media
#fincrimevirtualweek
Meet the Experts
6
Jeff Horowitz
Chief Compliance Officer
Coinbase
Meet the Experts
7
Jonathan Levin
Co-Founder
Chainalysis
Meet the Experts
8
Lana Schwartzmann
Chief Compliance Officer
Paxful
Meet the Experts
9
Jon Fishman
Senior Policy Advisor, Office of Terrorist Financing and Financial Crimes
US Department of the Treasury
• 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
Proprietary and Confidential
Why financial institutions will adopt cryptocurrency
11
Future proof
the business
20%
Revenue
opportunity
18%
Market leadership
18%
Client demand
44%
Proprietary and Confidential
62% of bitcoin is already used as a store of value
12
Lost
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 as price went from $9.9k to $11k
13
Inflows previously spiked when bitcoin briefly went over $10k
Unusual Sunday inflows ahead of large price move
Proprietary and Confidential
Most bitcoin flows within the Eastern Asia region, but 37% of flows cross regional borders
14
Proprietary and Confidential
~$10m is laundered per day, 47% of which is from darknet markets to exchanges
15
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
Twitter Hack – Anatomy of a Scam
Proprietary and Confidential
Twitter hack solved in under 16 days
18
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?
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
• 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
• 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
Questions?
THANK YOU!
Next session:
Crypto and Coffee
12:45 PM ET