Cryptocompliance 101: AML Training And Why Cryptocurrency Compliance Depends On It Explained

February 25, 2019
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Whether you’re launching an exchange or are starting small with a cryptocurrency ATM or two, your cryptocurrency business needs a BSA Compliance Officer.

As we covered earlier in this series, the BSA Compliance Officer is an essential feature of strong cryptocurrency compliance, keeping your business up-to-date on the latest regulations, and overseeing day-to-day compliance activities.

But the BSA Compliance Officer can’t be everywhere at once. When you’re just starting out, it’s likely the BSA Compliance Officer will have multiple roles, limiting the amount of time he or she can dedicate to day-to-day compliance.

Furthermore, as your business grows and you hire more employees, everyone who works for you will need to have a basic grasp of anti-money laundering (AML) policies and procedures, including how to spot suspicious activity in transactional data.

I can’t emphasize this enough: compliance is an institutional responsibility. Your BSA Compliance Officer will lead the charge, but everyone in your company needs to undergo basic AML training. It’s one of the four pillars of compliance for a reason. Today, we’ll explain why.

We’re continuing our series of cryptocompliance 101 posts to help cryptocurrency business owners understand the regulatory landscape, its nuances, and what steps need to be taken to strengthen their compliance. Today’s topic is AML training of employees.

We’ll cover:

  • The basics of AML training
  • Why it’s important
  • How employees use it in the course of their daily responsibilities.

Let’s dive in!

What Is AML Training?

AML training (or BSA/AML training) refers to coursework designed to familiarize employees with the process of money laundering, including how it works, how to spot it, and how to report it.

Money laundering is generally defined in this context as “engaging in acts designed to conceal or disguise the true origins of criminally derived proceeds so that the proceeds appear to have derived from legitimate origins or constitute legitimate assets.” 

A comprehensive AML training course will explain how “dirty” money enters the financial system, how criminals disguise it by converting it into things like money orders and/or moving it around to different accounts and institutions, and how they reclaim their successfully laundered money on the other side of the long, complex paper trail they’ve created.

AML training should also cover key regulations and what they mean for AML policies and procedures, and provide an overview of reporting requirements that include spotting “red flags” in customer transactions.

Who Requires It?

Regulators require that all employees, including contractors, of any MSB complete a mandatory BSA/AML training program as a condition of continued employment.

This means that cryptocurrency MSBs, just like MSBs in the traditional financial sector, must develop an AML program that adheres to requirements of the Bank Secrecy Act (BSA) and USA PATRIOT ACT as well as other AML laws and regulations at the federal and state levels. 

But as with everything in cryptocurrency compliance, there is no one-size-fits-all. AML training must be tailored to your company’s unique operations, size, and risk profile.

Why Is It Important?

The reason you and your employees need to know how money laundering works is that cryptocurrency money services businesses (MSBs) are major potential targets for financial crime.

Unregulated cryptocurrency exchanges are often targeted by financial criminals and terrorist financiers, and other services like “mixers” are easy to exploit as well.

If you’ve read this far and thought “well, I don’t run an exchange so I should be okay,” criminal money launderers are extremely sophisticated and constantly thinking up new ways to exploit cryptocurrency’s inherent vulnerabilities. By the time a money laundering scheme is reported by the media, it’s generally already been a successful ploy for years.

The bottom line is this: If you’re running a cryptocurrency business and have employees, those employees need to understand money laundering.

Here’s What AML Training Usually Entails

Like we stated above, AML training courses should include a section on how to identify “red flags” and other signs of money laundering that can pop up day-to-day. 

It should also instruct employees what to do when they identify suspicious activity, and detail their role in your company’s overall compliance strategy.

Training should also cover key laws and regulations related to AML, including the disciplinary consequences of non-compliance.

Typically, AML training is an ongoing requirement, but at least one training session should be given to all employees annually. Any current employees or contractors must be trained within 30 days of the implementation of, or update to, an AML program. Any new employee or contractor should receive training before their first day on the job.

Annual training of all employees is considered “bare minimum” by regulators. It is also recommended that you seek out additional opportunities to increase your company’s knowledge of relevant AML compliance, be it online training courses, webinars, or conferences.

How Employees Use AML Training Every Day

Your employees will use what they learn in AML training to identify suspicious transaction activities every day.

Suspicious activity should always be elevated to the BSA Compliance Officer, who is ultimately responsible for filing the appropriate reports, though employees should also understand AML reporting requirements.

AML training required annuallyHow can you actually use this?

Every one of your employees has a key role to play in your company’s compliance. Your employees will most likely be handling day-to-day tasks and will be closest to the transaction data in your system.

The bottom line is that compliance is the responsibility of every employee! 

Who Can Administer Training?

Generally, AML training will be developed and administered by the BSA Compliance Officer, though you can also hire a professional firm to administer training for your team (BitAML provides BSA/AML compliance training, and also helps businesses develop their own internal training regimen).

Creating an appropriate AML training course that is tailored to your specific AML policies and procedures, business model, size, and risk profile is going to be a challenge. BitAML’s cryptocurrency compliance experts are available anytime to consult with compliance officers and assist in the development of appropriate training materials. 

We’ll be happy to answer any questions you may have. Contact us today.


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