Global AML / KYC Draft Guidelines from DATA

The DATA Compliance Working Group, under the leadership of the AML/KYC Chair Juan Llanos, the DATA board and input from the DATA community, have formulated the first set of global guidelines on matters related to anti-money laundering and know-your-customer issues for companies operating in the digital asset industry.

The draft guidelines present a suggested global framework for these topics based around key pillars largely in line with FATF (Financial Action Task Force) guidelines on virtual currency and financial services.  These include implementing an AML program, conducting a risk assessment, employing risk-based approaches on identity and due diligence, transaction monitoring, appointing an independent Chief Compliance Officer, implementing employee training, and undertaking periodic reviews.

Read and Download the Draft Guidelines

In particular, the Working Group noted recent statements by FATF outlining opportunities for new business models in this space that can be facilitated by digital asset technologies, including blockchains, distributed ledgers and closed loop systems:

“54. Financial institutions and DNFBP could also explore developing business models to facilitate customer identification/verification, transaction monitoring, and compliance with other relevant AML/CFT requirements. For example, institutions involved in transmitting decentralised convertible VC could consider creating an industry association(s) composed of vetted VC institutions and develop policies and practices for members that allow them to identify specific transactions as coming from a member that has applied appropriate CDD and is conducting appropriate transaction monitoring.”

“The recommendations DATA released today and over the coming months provide necessary guidance to a digital currency industry that struggles to reconcile digital, peer-to-peer internet technologies with regulatory frameworks established, in some cases, decades ago,” said Juan Llanos.

“Developed in concert with DATA members and industry stakeholders, these AML recommendations will guide companies in establishing policies and practices to mitigate the financial crime risks associated with the transfer of digital assets.”

DATA expects to evolve guidelines according to changing circumstances and technologies unique to the fast moving nature of digital assets to potentially harness new opportunities to balance consumer privacy and safety with the regulatory requirement to monitor and prevent activity from bad actors wherever possible.

A comment period for the guidelines in now open, with DATA members encouraged to submit comments directly via the Secretariat.

The draft guidelines represent the second major policy output from DATA, following the release of the Windhover Principles – a framework for privacy and individual data ownership, in conjunction with ID3, MIT Media Lab and over 21 company signatories. It was released October 2014.