The sanctions scandal for money laundering in SUEX in 2021 was the first in the history of the world of cryptocurrencies, but far from the last. Mistakes can easily cause sanctions against the company and lead a business to collapse. Maxim Kurbangaleev explains how to counteract financial terrorism, fraud, and money laundering.
Don’t go the SUEX way – Maxim Kurbangaleev
“In order to conduct a legal exchange business, first of all it is necessary to choose a jurisdiction where working with cryptocurrencies is not illegal,” Maxim Kurbangaleev says.
The expert emphasizes that it is impossible to open a legally permitted exchange without a cryptocurrency license. The license allows you to manage assets, exchange cryptocurrency for fiat, make transactions, and other operations. To obtain a license, it is required to comply with all the requirements of the chosen jurisdiction, as well as to open a legal entity whose activity involves the exchange and sale of cryptocurrencies.
“The United Kingdom, the United States of America, Lithuania, and Estonia—among other countries, provide an opportunity to obtain a cryptocurrency license for the business. After choosing a jurisdiction and registering a legal entity, you need to find licensed exchange platforms. It is possible to sign contracts only with those exchange platforms where AML requirements are strictly followed. All these actions will require time and funding, however, it will protect the business from the fate of SUEX and sanctions for money laundering,” Maxim Kurbangaleev notes.
Risk-oriented approach to counter financial terrorism – Maxim Kurbangaleev
“Having signed contracts with exchange platforms and obtained a cryptocurrency license, it is necessary to open bank accounts and hire qualified AML officers.” One should not cut costs when it comes to AML policies. It will allow businesses to work legally and resist money laundering, drug trafficking, and other criminal operations,” Maxim Kurbangaleev emphasizes.
Laundering of fraudulent funds is a serious offense, often associated with terrorist organizations and other types of crime. The expert believes that crypto exchanges are obliged to conduct AML checks and follow the rules of the AML policy if they want to avoid the mistakes made by SUEX.
“The list of tasks of AML specialists includes rapid response, assessment, and risk management, as well as taking all effective measures to prevent fraudulent actions. In addition to implementing AML policy, crypto exchanges should use blockchain analysis tools (Coinpath, Chainalysis, etc.) and check all assets. The failure to comply with at least one requirement from the chosen jurisdiction opens the threat of sanctions and other prohibitive measures,” Maxim Kurbangaleev says.
The expert explains that AML procedures must be the same for all clients. Passport data and photos are necessary to verify the identity of the client and to check databases (terrorists, sanctions and others).
“Illegal activity is not the key to capitalization growth.” It won’t take a company to a new level, but vice versa. “Only careful compliance with legislation and AML requirements will help preserve the crypto exchange business and avoid the fate of SUEX,” Maxim Kurbangaleev sums up.