Cryptocurrency, compliance and how to spot those red flags
Did I ever expect to know anything about red flag indicators relating to cryptocurrency transactions or extended customer due diligence? Or to know what AML or CFT even mean? Well, I probably would have heard about them being an accountant but I moved out of that line of work just before the financial world went AML crazy.
The first time I heard those mysterious abbreviations was in August 2020 when I was browsing through Trade Me listings looking for an interesting job that would utilise my skills other than financial or management accountant roles.
I started my accounting career as an office manager at a small IT firm, continued as an auditor at EY and finished it at the Auckland International Airport. Just after I got my CA (good timing!) I realised that accounting is not what makes me excited and keeps me going.
"The miraculous world of compliance where every decision you make is literally going to affect people’s lives."
Well, it did keep me going during late nights completing sample testing or preparing financials and I cannot be happier knowing that time has passed.
In September 2020 I took the role of Compliance Officer at BitPrime, one of New Zealand’s leading cryptocurrency retailers. I self-studied the AML/CFT legislation and all regulator guidance issued at that time and I was amazed at how interesting the job might be. I moved to the AML/CFT field almost two years ago now and there hasn’t been a day gone by where I didn’t feel gratitude towards my fate that brought me to that Trade Me page.
Instead of multiple spreadsheets with millions of tiny numbers and IFRS standards, I am involved in the miraculous world of compliance where every decision you make is literally going to affect people’s lives. It can be your customer, your employee, your management, or yourself!
The industry
"The compliance industry requires you to bring out your inner lawyer/accountant/communications coordinator and crisis manager."
The cryptocurrency industry poses additional challenges that keep you on your toes about every recent technological development. Not only those that relate to the cryptocurrency industry itself, but also to the transaction monitoring you must do – constant vigilance against scammers, criminals and fraudsters who find this mode of payment very attractive. Scams are moving in front of technological advances in the compliance field most of the time. There are a number of reasons for it, one of them being the slow speed of big business bureaucracy. BitPrime is a small company, and I am glad that every decision that we make has the ability to be implemented by the end of the day we discussed it.
Trust your instincts
I find the AML/CFT field fascinating. I have heard a number of complaints about how risk based legislation is hard to understand and implement. I thrive in risk-based legislation. It makes complete sense to me and I couldn’t do it in any other way. That’s exactly the way you want to do it. Ask for certified copies from a $10K transaction if you find it risky (your customer is completely and utterly unaware what a “wallet” is and tells you he wishes to buy some “blockchain”) but approve a $20K one based on the bank statement and a search of public sources. Because sometimes it just makes sense!
That’s what AML compliance is all about to me and that’s what makes it very different from accounting. There is no black and white, there is a judgement that you must apply based on the existing information, your research, gut feel and common sense. Cryptocurrency compliance has many indicators that can point you in the right direction and give you the feeling if the business relationship or transaction “makes any economic sense”.
To conclude...
It is challenging and never easy
One day you wonder if you add any value to the company or society. That day is when your customers send you the “extremely dissatisfied” reviews when you decline their accounts or call you names because they just don’t want to share their personal information.
And there are other days, when DIA or FATF issue a brand new VASP (Virtual Asset Service Provider) guidance or VASP Red flag indicators and it makes your world bright and sunny again because it provided answers you couldn’t find anywhere else!
It has been a roller coaster ride, starting from the moment I submitted my first AML report and up until now when I am researching the advanced transaction monitoring technologies available for cryptocurrency businesses.
But that’s why we live our lives and get up from the bed each morning, isn’t it? To develop, to look forward, to solve problems, to find solutions, to overcome and empower!
I am a happy person now and I want to assure everyone who thinks about changing jobs, fields, countries – it is never too late.
I was 31 when I decided to quit accounting right after I achieved everything for what is assumed to be “a perfect and guaranteed career path”. I left with no job and we moved to another town (from Auckland to Rakaia of all places!) where I did not know a soul. I took my break and got back to life. And what a great life I must say!
Sometimes, it’s all what’s needed – to take a break and a deep breath and to ask yourself some honest questions. And if you hesitate answering even one of them – you get your answer.
Find out more about ‘Compliance in Crypto’ with Alex McCorkindale as she discusses the challenges and benefits, and what compliance in crypto looks like to date.
Anna Rybakova 
Bernie Hankey 
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