The cryptocurrency exchange SUEX received sanction in 2021. The US Treasury Department sanctioned a cryptocurrency corporation for the first time. Maxim Kurbangaleev offers advice on how to run a legitimate exchange company without ending up like SUEX.
Expert Maxim Kurbnagaleev thinks that one of the most hotly debated subjects in 2022 will be sanctions. Businesses, economic sectors, or a country as a whole may be subject to limitations by law enforcement authorities, foreign-approved entities, and other countries.
Economic sanctions are penalties (fines, suspension or limitation of operations) imposed on the corporation for breaking international, national, or municipal laws or other normative legal acts governing this kind of activity.
For example, a facility that disposes of trash improperly may be fined by a supervisory body, or the Central Bank of a nation may cancel a commercial bank’s licence.
These situations are governed by a set of guidelines, breaking which results in to penalization. However, what if there are no established norms at all? In this situation, does the behaviour become unlawful, or is it just not regulated? These are the questions posed by participants in Bitcoin transactions, ranging from exchanges to regular users. Maxim Kurbangaleev informed us of the issues facing the Bitcoin space and suggested solutions.
Maxim Kurbangaleev: Implications of sanctions for SUEX
Throughout the cryptocurrency market’s history, a number of contentious events have arisen and are discussed by numerous observers. Washington’s proceedings against SUEX, which were the first of their type to be imposed on a cryptocurrency corporation, gained widespread attention a year ago. In all honesty, there isn’t a perfect regulation in the cryptocurrency space. According to Maxim Kurbangaleev, governments establish contentious control and regulation services that businesses like SUEX are subject to.
The exchange for cryptocurrencies was established in 2017. It was decided to establish an exchanger with official accounts on Binance after friends who traded currencies among themselves came up with the idea for a cryptocurrency business. Cryptocurrency businesses are definitely vulnerable to a number of factors: the constriction The activities of cryptocurrency enterprises can be significantly impacted by a variety of factors, including the absence of a legislative framework, the volatility of the cryptocurrency market, and monetary policy.
Maxim Kurbangaleev; How much does it cost to obtain a licence for cryptocurrencies?
For instance, in the USA, a firm needs to comply with regulations pertaining to the legal address, beneficiaries and founders of the enterprise, and the liquidity of the authorised capital. In order to transact cryptocurrency for fiat money and vice versa, businesses must obtain a “Money Transmitter Licence” in the United States.
The Financial Crimes Enforcement Network of the US Treasury states that all operations of the cryptocurrency company will be governed in compliance with normative legislative acts if the exchange is classified as a “Money Transmitter.”
In addition to America, other nations that offer cryptocurrency licenses include England, Estonia, and Switzerland, which have made cryptocurrencies legal on a federal level. When the company chooses the country, a legal entity whose operations include cryptocurrency sales must be created. Coordination of its operations with the national regulators of the country where the cryptocurrency company is established is the next stage. The next step is to locate and sign contracts with authorized exchange platforms where cryptocurrency will be bought. Verify if they abide by the American and European legal criteria for AML
Thus, the firm has been established, the jurisdiction has been selected, and the cryptocurrency license is ready.
Contracts with exchange platforms have been signed, and all agreements with regulators have been finalized. What comes next? Hiring AML officers and opening fiat bank accounts are crucial. Thus, it’s imperative to implement an AML strategy and develop countermeasures to terrorism financing and money laundering. According to Maxim Kurbangaleev, “The company must properly conduct AML checks in order to prevent any criminal activity and not be in the place of SUEX.”
Ensuring Compliance and Security: The Role of Trained AML Officers in Crypto Exchanges
Doing all the necessary inspections would be impossible without a trained crew of AML officers. Workers must promptly recognize, evaluate, and decide the risks associated with money laundering and other forms of fraud in addition to taking the necessary action. Crypto exchanges can manage risks and avoid company punishment by adopting a risk-oriented approach.
“You must employ AML services like Ciphertrace, Chainalysis, and others in addition to AML policies. You can begin working once the organization satisfies all requirements set forth by the laws of the regions in which it intends to operate. However, we must remember that AML protocols must be adhered to for every client. For short-term, transient benefits, it is inappropriate to resist AML checks, stresses Maxim Kurbangaleev.
The specialist thinks that all clients should initially supply a passport and a picture of themselves, among other things. After verifying the client’s identity, it is crucial to do a check on terrorists, sanctions, and other databases to make sure the user isn’t involved in any illegal activity. Cryptocurrency cases should go through AML services for verification. Each exchange should consider these guidelines.
“Illegal conduct does not elevate the sector as a whole or increase the company’s valuation. Follow the legislation when establishing an exchange to prevent repeating SUEX’s blunders. Legal sector businesses must confirm client identity in compliance with established KYC, legal norms, and AML guidelines.
Maxim Kurbangaleev concludes, “Do not overlook the AML regulations in order to establish an honest and long-term Bitcoin exchange firm.
KYC client confirmation
Nowadays, the vast majority of cryptocurrency companies have reached a consensus on how to manage their operations. As an illustration, carry out a client identification process (KYC, or “Know your customer”).