There is No Perfect Regulation Without Risks in The World of Cryptocurrencies

“There isn’t any excellent regulation with out dangers on the earth of cryptocurrencies”

– Maxim Kurbangaleev on sanctions and SUEX

Within the fall of 2021, there was a precedent that marked the start of large-scale sanctions on the earth of cryptocurrencies: the Ministry of Finance of America imposed sanctions in opposition to the cryptocurrency firm SUEX on the premise of cash laundering allegations.

In response to the US Treasury, SUEX “participated in fraudulent monetary schemes,” together with “servicing Hydra” – the primary darkish internet drug market within the nation. Maxim Kurbangaleev discusses sanctions within the monetary sphere and explains what an trustworthy enterprise ought to do so as to not get into such conditions.

Maxim Kurbangaleev: why SUEX confronted sanctions

“All through the historical past of the cryptocurrency market, varied controversial conditions happen, which develop into the topic of dialogue of many analysts. A yr in the past, Washington’s actions in opposition to SUEX grew to become extensively identified – these are the primary sanctions of their form imposed on a cryptocurrency firm. Objectively, there is no such thing as a excellent regulation on the earth of cryptocurrencies. Governments create controversial management and regulation providers, beneath the actions of which firms akin to SUEX fall,” says Maxim Kurbangaleev.

The cryptocurrency alternate firm was based in 2017. The concept of a cryptocurrency enterprise originated amongst buddies who exchanged currencies amongst themselves – so it was determined to create an exchanger with official accounts on Binance. Undoubtedly, cryptocurrency firms are prone to numerous components: the tightening of financial coverage, the volatility of the cryptocurrency market, the shortage of a legislative framework, and plenty of different issues can vastly have an effect on the exercise of crypto firms.

“At SUEX, cryptocurrency on official Binance accounts was checked for “purity” by means of transaction monitoring providers as required by AML/CTF. US regulation enforcement companies and regulators didn’t take into consideration the continued AML monitoring actions and added the exchanger to the sanctions listing as a result of suspicions of cash laundering.

With out interviewing the SUEX executives, with out in-depth evaluation, and even and not using a trial. Tons of of individuals and companies related to the corporate have been additionally affected – all those that carried out operations utilizing the SUEX pockets on Binance have been marked, and their accounts have been flagged as suspicious,” says Maxim Kurbangaleev.

An analogy will be drawn with money flowing from hand at hand. It’s virtually unimaginable to seek out out who they belonged to and what transactions they participated in earlier than they bought into the pockets – the chain of banknote actions is on the market solely as much as the second hyperlink.

Think about that an individual will get his fingers on “soiled” funds, the trail of which he can not bodily hint. He goes to the shop, makes a purchase order, and is dropped at justice with out verification, accusing him that he obtained cash for drug trafficking or funds laundering. That is how regulators on the earth of cryptocurrencies function right now.” explains Maxim Kurbangaleev.

Maxim Kurbangaleev on the significance of KYC

“The obscurity and uncertainty are what all the time accompany the crypto world. What is going to occur tomorrow? Now there are small constructive adjustments in AML checks – transactions within the Bitcoin and the Ethereum networks will be analyzed in additional element and in depth, however this requires giant assets,” says Maxim Kurbangaleev.

Anybody can get right into a state of affairs the place a crypto pockets could also be marked for a suspicious transaction. Any crypto firm can be sanctioned for costs of cash laundering or different fraud with out investigation and trial. What ought to we do to reduce the dangers and never face sanctions like SUEX?

“Firstly, it’s obligatory to conduct KYC for completely all purchasers. For enterprise, it’s vital to attach not solely crypto monitoring utilizing blockchain analytics providers but additionally traditional instruments for analyzing transactions in fiat forex, as they do in banks. It’s essential to conduct a full financial institution verify of its customers, with none exceptions,” Maxim Kurbangaleev recommends.

KYC procedures are a set of id checks. Identification of the shopper is obligatory for any monetary establishment from banks to crypto exchanges. Along with verifying the id of consumers, SOF (clarification of the supply of funds) and SOW (knowledge on sources of wealth) procedures could also be required throughout onboarding. Each checks will assist determine fraudsters and criminals concerned in cash laundering, drug trafficking, or terrorist financing.

“Conduct enterprise within the “white” section, type a compliance management division for buyer identification processes and monitor the “purity” of operations. Amassing necessities from purchasers mustn’t elevate questions – this can be a customary and satisfactory process, with out which it’s unimaginable to think about an trustworthy enterprise. If a crypto firm nonetheless falls beneath sanctions or scrutiny from regulation enforcement companies, rent an excellent lawyer. The principle factor is to not panic and take all dangers with a chilly thoughts,” Maxim Kurbangaleev sums up