Key Takeaways From The ABS' Industry Perspective On Best Practices Recommendations On Compliance Risks With A Nexus To Digital Assets

The recommendations set out a two-step consideration for FIs wondering if a particular digital asset would benefit from additional controls. First, how relevant is the asset from the ML/TF/sanctions angle? The ABS recommends that an asset should be considered relevant so long as it can be traded, transferred, used for payment or used for investment, as it could then be used to store or facilitate the movement of tainted proceeds. Second, to what extent does the asset present ML/TF/sanctions risks? This query can be looked at through three lenses:

• Governance model – Whether the asset is backed by a Government or a consortium of regulated entities, such that it would be subject to regulations. An asset which is not so backed or subject to regulations, or which has a governance model that is partially or fully centralised and allows for anonymity, would present a higher risk.