AML for Cryptocurrency

Cryptocurrency was established to create a system for electronic transactions without relying on trust of a central authority. It is a peer-to-peer value transfer system that requires no central authority or middlemen, decentralizing control to cryptography.
There have been more than 21,000 different cryptocurrencies created since Bitcoin in 2009. The value of all existing cryptocurrency is around $804 billion, with around $320 billion of that being attributed to Bitcoin (as of January 2023).
Crypto involves a race to solve a computational puzzle. The probability of solving the puzzle is very low and computer hardware requirements are high. This creates an environmental problem with significant number of servers and high energy output.

Following this module, you will be able to:

• Describe what cryptocurrency is and how it works
• Recognise the key challenges facing the cryptocurrency market
• Identify the key risks of cryptocurrency to conventional banking
• Identify the key red flags for cryptocurrency
• Understand the mining process and its environmental impact

Students will gain an understanding as to:

• The AMLD5 requirements that exchanges and wallets must comply with their regional supervising regulator to demonstrate that they have appropriate KYC and AML compliance.
• What is the difference between the FinCEN’s 2011 Money Service Business Final Rule requiring registration, an MLRO and the ability to identify and report suspicious activity including transactions in excess of $10,000. Final Rule covers both crypto-to-crypto services and fiat-to-crypto services. Including crypto ATMs, mixers, dApps that sell coins, ICO issuers, mining pool operators, custodial wallets, and crypto payment processors.
• Understand the FATF Guidance reference to exchanges and wallets as "Virtual Asset Providers" or VASPS and why VASPS.