How To Perform An AML Compliant Token Sale - TAG Consultancy
by Liz Seyi Digital marketing managerBackground to an AML compliant token
sale
There is a global move towards the
regulation of virtual assets (“VA’s”) and Virtual Asset Service Providers
(“VASP’s”) under the Financial Action task Force (“FATF”). Included in this
category are the issuance of token sales, at which Gibraltar is at the forefront.
Accountant services in Gibraltar!
Below we will aim to describe the
requirements of a fully AML compliant token sale from Gibraltar, though the
processes would not differ significantly from jurisdiction to jurisdiction.
What is a token sale
Specifically, the POCA 2015
(page 55) captures the following:
“undertakings that receive, whether
on their own account or on behalf of another person, proceeds in any form from
the sale of tokenised digital assets involving the use of DLT or a similar
means of recording a digital representation of an asset”.
Conducting an AML Compliant Token
sale
1. Type of token sale
Consideration will be required on
whether to perform any of, or a combination of the following:
(1)
Private sale
(2) Public sale
The workload, processes, procedures
and overall risk profile will vary significantly depending on the type of token
sale being conducted.
2. Key documentation
A business risk assessment will need
to be conducted in order to assess the AML/CFT risks associated with the
business operations.
In addition to this, policies and
procedures will need to be drafted for AML/CFT as defined in Section 26A of
POCA.
Finally, a compliance report will
need to be completed.
3. Due Diligence
The type of due diligence will be
driven by the risk profile of the token purchaser, with consideration required
on the 4 risk categories as follows:
Customer Risk
Interface Risk
Country Risk
Product Risk
The Due diligence information for
consideration will always be:
Proof of ID
Proof of address
Source of wealth and source of funds
4. Systems and software for
collection of data
It is common to use systems and
software for the purposes of gathering and storing KYC and Due Diligence
information. These are sometimes done using simple forms, such as Google
sheets, or software when there are large volume of data to review.
In any instance, it must be fit for
purpose, secure and safe.
5. Wallet screening
Due to the transparent nature of
blockchains, it is possible to employ wallet screening checks as part of the
process, in order to track the origin of funds and ensure that it is not originating
from a malicious source. Wallet screening is generally performed by using a
third party software provider and the parameters can generally be tailored to
be more/less sensitive, depending on the risk appetite of the firm.
The Team at TAG Consultancy have
assisted entities in conducting fully compliant AML token sales and would be
happy to assist you with the entire process from start to end.
Get in touch with us here to find out more!
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Created on Feb 19th 2022 06:08. Viewed 71 times.