Learn from the Best: Top PHive Crypto Enforcement Tips | Crypto

Learn from the Best: Top PHive Crypto Enforcement Tips

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-In May 2022, the DOJ required the companys CCO and CEO to sign a certification at the end of the Agreements term affirming that: (1) they are aware of the Companys compliance obligations under . . . the Agreement; (2) based upon their review and understanding of the Companys . . . compliance program, the Company has implemented . . . [a] compliance program that meets the requirements set forth in the Agreement; and (3) the compliance program is reasonably designed to detect and prevent violations [of applicable laws] throughout the Companys operations.

-The AAGs proposal was put into practice in May 2022, when the Criminal Division imposed this certification requirement for the first time as part of a corporate resolution.

-This development reflects a growing focus on ensuring that compliance personnel are properly placed in a companys hierarchy, sufficiently empowered and resourced, and fully exercise their authority.

-Nearly a month ago, OFAC announced a first-of-its-kind sanctions designation of a decentralized platform, and the move continues to reverberate throughout the crypto ecosystem.

-The move by OFAC also indicates that the agency doesnt distinguish between centralized or decentralized applications. In other words, the Tornado Cash action strongly suggests that decentralized systems may be held to at least some of the same compliance obligations as centralized systems or products, and that regulators wont refrain from taking enforcement action against smart-contract based platforms that are ostensibly operating without any persons behind them.

-Even though E.O. 13694 limits sanctions to persons (which are defined to include a partnership, association, trust, joint venture, corporation, group, subgroup, or other organization), its possible that this is the first government action that defines a decentralized application as an entity. The impact of such applications being considered entities by the U.S. government opens up significant liability across multiple criminal and administrative obligations.

-FinCENs SAR Stats suggest that the number of annual virtual currency SARs has increased exponentially over the past five years.

-The certification requirements are sobering. Most crypto-native companies are building compliance programs from scratch under challenging and fast-moving circumstances. Incomplete or deficient certifications from earlier years may come back to haunt a company that is facing negative findings in a later-in-time examination.

-At a high level, NY DFSs blockchain analytics guidance puts in black and white that blockchain based financial institutions must broadly utilize blockchain analytics services, whether their own proprietary solutions or those of outside vendors.

-DFS also comes right out and says that the expectations for monitoring the activities of customers are different than with fiat,

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