As the cryptocurrency market matures, anti-money laundering (AML) regulations become especially critical, particularly for institutional trading. The surge in digital currency trading volumes, spearheaded by institutional investors, stresses the necessity for strict AML regulations. AML protocols are essential not just for the legitimacy and stability of the crypto markets but also as a safeguard against the misuse of these platforms for money laundering and other illicit financial activities. For example, institutional trading crypto on WhiteBIT is accompanied by robust AML measures. Being one of the largest exchanges, it is under close scrutiny due to its large volume of transactions. Who sets AML for crypto? Let’s figure it out in this article.
Who is Behind Crypto AML Compliance?
At the forefront of global AML compliance efforts is the Financial Action Task Force (FATF), an intergovernmental organization that plays the main role in setting international standards for combating money laundering and terrorist financing. The FATF’s guidelines define the meaning of a virtual asset service provider (VASP). These are crypto exchanges, stablecoin issuers, decentralized finance protocols, and non-fungible token marketplaces. The FATF’s guidelines are critical for establishing a unified approach to AML compliance across the crypto industry. They provide a framework for countries to adapt and enforce within their jurisdictions.
Here is what cryptocurrency AML procedures include for VASPs:
- Know-your-customer (KYC) protocols
- Transaction monitoring: https://whitebit.com/aml-service
- Client risk assessment
- Reporting suspicious activity
- Record-keeping
- Appointing of a compliance officer
- Employee training
- Sanctions screening
- Enhanced due diligence
- AML audit and review.
Crypto AML Compliance Authorities in Different Countries
The regulatory landscape for crypto AML compliance varies from country to country. In the United States, the Bank Secrecy Act, along with its implementing regulations, mandates AML obligations for financial institutions, including crypto exchanges. This encompasses the creation of written AML programs, the establishment of internal controls, and the reporting of suspicious activities.
In the European Union, the Fifth Anti-Money Laundering Directive (5AMLD) imposes AML cryptocurrency requirements on exchanges and custodian wallet providers.
In Canada, it is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It requires exchanges and crypto-related businesses to implement compliance programs, maintain records, and report suspicious and large operations to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
In Australia, the Anti-Money Laundering and Counter-Terrorism Financing Act imposes similar AML obligations on asset exchange providers. This Act necessitates implementing compliance programs and reporting suspicious transactions to the Australian Transaction Reports and Analysis Centre (AUSTRAC).
The push for comprehensive AML Bitcoin compliance is a global initiative. Countries are adopting and adapting FATF recommendations to combat money laundering and terrorist financing.
